When investors buy more capital goods because the interest rates have fallen, the aggregate demand curve
A) shifts right.
B) shifts left.
C) does not shift.
D) stays the same.

Question

Quizplus · Accepted Answer

When investors buy more capital goods due to lower interest rates, it increases investment spending which leads to a rightward shift in the aggregate demand curve. This is because when investors spend more, it increases demand for goods and services which in turn stimulates economic growth.

When Investors Buy More Capital Goods Because the Interest Rates