How is the investment demand curve for the economy drawn as it relates to real interest rates?
A)as a vertical line
B)as a horizontal line
C)as a downward sloping line
D)as an upward sloping line

Question

Quizplus · Accepted Answer

The investment demand curve for the economy is typically drawn as a downward sloping line. This is because as real interest rates decrease, the cost of borrowing money to invest in capital projects decreases, making such investments more attractive to businesses. As a result, the quantity of investments demanded by firms will increase as real interest rates decline, leading to a downward sloping investment demand curve.

How Is the Investment Demand Curve for the Economy Drawn