Refer to the above diagrams.Curve A:
A)is an investment schedule and curve B is a consumption of fixed capital schedule.
B)is an investment demand curve and curve B is an investment schedule.
C)and B are totally unrelated.
D)shifts to the left when curve B shifts upward.

Question

Refer to the above diagrams.Curve A:
A)is an investment schedule and curve B is a consumption of fixed capital schedule. 
B)is an investment demand curve and curve B is an investment schedule. 
C)and B are totally unrelated. 
D)shifts to the left when curve B shifts upward.

Quizplus · Accepted Answer

Curve A represents the investment demand curve as it shows the level of investment spending at different interest rates. Curve B represents the consumption of fixed capital schedule which shows the amount of capital that needs to be replaced due to wear and tear. These two curves are related through the amount of investment spending required to replace the existing capital stock. When curve B shifts upward, it represents an increase in the amount of capital that needs to be replaced which will lead to a shift in the investment demand curve (curve A) to the left as businesses will be less inclined to invest due to the increased cost of replacing their capital stock.

Refer to the Above Diagrams.Curve A