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Consider the Market for Financial Capital in the Long Run

Question 42

Multiple Choice

Consider the market for financial capital in the long run.The investment demand curve is downward sloping because


A) an increase in the real interest rate leads to an increase in investment demand.
B) all components of desired investment are negatively related to the real interest rate.
C) all components of desired investment are positively related to the real interest rate.
D) a decrease in the real interest rate reflects a higher opportunity cost to firms of using financial capital.
E) an increase in the real interest rate reflects a lower opportunity cost to firms of using financial capital.

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