The following figures show the demand (D) and supply (S) curves of micro and macro economists.Figure 16.6

-When the rate of interest rises, the resulting change in the demand for capital is shown graphically by:

Question

The following figures show the demand (D) and supply (S) curves of micro and macro economists.Figure 16.6
 
-When the rate of interest rises, the resulting change in the demand for capital is shown graphically by:

Quizplus · Accepted Answer

An increase in the rate of interest would lead to a decrease in the demand for capital. This is because higher interest rates make borrowing more expensive, so firms and individuals are less likely to invest in new projects or make major purchases. This change is shown graphically as a leftward shift of the demand curve.

The Following Figures Show the Demand (D) and Supply (S)