The investment-demand curve will shift to the left as a result of:
A)an increase in the excess productive capacity available in industry.
B)a decrease in business taxes.
C)increased business optimism with respect to future economic conditions.
D)a decrease in labor costs.

Question

Quizplus · Accepted Answer

An increase in the excess productive capacity available in industry means that businesses already have sufficient capacity to meet their current demand, making them less likely to invest in additional capacity. This decreases the demand for investment and shifts the investment-demand curve to the left. The other answer choices, such as a decrease in business taxes or labor costs, may increase investment and shift the curve to the right.

The Investment-Demand Curve Will Shift to the Left as a Result