If the market interest rate decreases, then there will _____
A) be an upward movement along the investment demand curve.
B) be a downward movement along the investment demand curve.
C) be a rightward shift of the investment demand curve.
D) be a leftward shift of the investment demand curve.
E) be neither a movement along nor a shift of the investment demand curve.

Question

Quizplus · Accepted Answer

A decrease in market interest rate makes investment less costly, which increases the expected returns from investment projects, motivating firms to invest more. This will lead to a downward movement along the investment demand curve as quantity demanded of investment increases.

If the Market Interest Rate Decreases, Then There Will _____