Which of the following will cause the investment schedule to shift downward?
A)an increase in the real interest rate
B)a decline in wage rates
C)a significant decline in the real interest rate
D)a new technological advance which cuts the price of steel by one-half

Question

Quizplus · Accepted Answer

An increase in the real interest rate will cause the cost of borrowing to increase, making it more expensive for firms to finance investment projects. This will lead to a decrease in investment and a downward shift in the investment schedule.

Which of the Following Will Cause the Investment Schedule to Shift