The firm's investment demand curve shows

Question

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The investment demand curve shows how the firm's desired purchases of new capital vary with the interest rate. This relationship is important for firms to determine their optimal level of investment spending. As interest rates increase, the cost of borrowing to finance investments also increases, which can lead to a decrease in investment spending. Conversely, as interest rates decrease, the cost of borrowing decreases and the incentive for firms to invest increases.

The Firm's Investment Demand Curve Shows