Investment Demand Curve (ID)

Investment Demand Curve (ID)

what is the shape of the investment down curve?
- downward sloping

why?
- when interest rates are high, fewer investments are profitable;when interest rates are low more investments are profitable

• changes ink r% causes changes in Ig. Factors other than r% may shift the entire 

Shifts in Investment Demand (ID)

- cost of production 

• lower cost shift ID->
• high cost shift ID <-

- business taxes

• lower business taxes shift ID ->
• higher business taxes shift ID<-

- Technological change

• new technology shift ID->
• lack of technology change shift ID<-

-Stock of Capital 

• If an economy is low on capital, then ID ->
• If an economy has much capital then ID <-

-Expectations

• positive expectations shift ID ->
• Negative expectations shift ID <-