Investment Demand Curve (ID)

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