A downward movement along the investment demand curve would be caused by a(n):
A) increase in the expected rate of return on investment caused by an increase in business confidence.
B) decrease in the expected rate of return on investment caused by a decrease in business confidence.
C) increase in the rate of interest.
D) decrease in the rate of interest.

Question

Quizplus · Accepted Answer

A decrease in the rate of interest would make investment more attractive, leading to an increase in investment demand and a downward movement along the investment demand curve. Choices A and B describe shifts in the curve, rather than movements along it. Choice C is incorrect because an increase in the rate of interest would lead to a decrease in investment demand and a leftward shift of the investment demand curve.

A Downward Movement Along the Investment Demand Curve Would Be