The investment-demand curve will shift to the left:
A)if firms plan to increase their inventories.
B)if firms plan to decrease their inventories.
C)if firms expect an increase in their sales.
D)if firms expect no change in their sales.

Question

Quizplus · Accepted Answer

When firms plan to decrease their inventories, they will need to produce less, which will decrease their demand for investment in capital goods. Thus, the investment-demand curve will shift to the left. A, C, and D are incorrect because firms' inventory or sales expectations do not directly impact their demand for investment.

The Investment-Demand Curve Will Shift to the Left