Unit 3 - Investment Demand Curve

February 18, 2015

The investment demand curve is downward sloping. This is because when interest rates are high, fewer investments are profitable; when interest rate are low, more investments are profitable.

Shifts in Investment Demand

• Cost of production
• Lower cost (Dig Shift >)
• Higher cost (Dig Shift <)
• Business Taxes
• Lower business taxes (Dig Shift >)
• Higher business taxes (Dig Shift <)
• Technological ∆
• New technology (Dig Shift >)
• Lack of technological changes (Dig Shift <)
• Stock of capital
• If an economy is low on capital (Dig Shift >)
• If an economy has much capital (Dig Shift <)
• Expectations
• Positive expectations (Dig Shift >)
• Negative expectations (Dig Shift <)