If the vertical axis of a demand curve for capital is represented by the price of capital goods (rather than the interest rate), then a rise in the interest rate would:

Question

Quizplus · Accepted Answer

With the vertical axis of a demand curve for capital represented by the price of capital goods, an increase in the interest rate would make capital more expensive, leading to a decrease in demand for capital goods, which would cause the demand curve for capital to shift to the left.

If the Vertical Axis of a Demand Curve for Capital