When we draw an investment demand curve, we hold constant all of the following except
A) the expected rate of return on the investment.
B) business taxes.
C) the interest rate.
D) the present stock of capital goods.

Question

Quizplus · Accepted Answer

The investment demand curve shows the relationship between the interest rate and the amount of investment firms are willing to undertake. All other factors, such as the expected rate of return on the investment, business taxes, and the present stock of capital goods, are held constant. The interest rate is the variable that changes along the curve.

When We Draw an Investment Demand Curve, We Hold Constant