A firm's downward- sloping investment demand curve is usually plotted with on the vertical axis.

Question

Quizplus · Accepted Answer

The downward-sloping investment demand curve represents the relationship between the interest rate and the quantity of investment spending. As the interest rate increases, the cost of borrowing funds to invest increases, which reduces the expected rate of return on investment. Therefore, firms will decrease their investment spending, resulting in a downward-sloping investment demand curve. The vertical axis of this curve typically represents the interest rate.

A Firm's Downward- Sloping Investment Demand Curve Is Usually Plotted