All of the following would cause the investment function relating investment to the interest rate to shift EXCEPT
A) a change in the real interest rate.
B) a change in producer expectations of future profit.
C) a change in planned capital goods expenditure.
D) a change in productive technology.

Question

Quizplus · Accepted Answer

A change in the real interest rate causes a movement along the investment function, not a shift of the function itself. Shifts are caused by factors like changes in expectations of future profit, planned capital goods expenditure, and technology, which affect investment demand at all levels of interest rates.

All of the Following Would Cause the Investment Function Relating