The figure shown depicts a shift in investment (Q0 to Q1) demand by consumers in response to a decrease in interest rates (r0 to r1). What does this shift indicate about consumers' business confidence?

Question

Quizplus · Accepted Answer

The shift in investment indicates an increase in business confidence.
Key Takeaway: In an investment demand curve, interest rates are plotted against investment. In this curve, a decrease in interest rates is accompanied by an increase in consumer investment. This increase in consumer investment reflects an increase in business confidence.

The Figure Shown Depicts a Shift in Investment (Q0 to Q1)