Describe the relationship shown by the investment demand curve.
What will be an ideal response?
The investment demand curve relates investment to the real rate of interest and the expected rate of return. Graphically the interest rate and expected rate of return are measured on the vertical axis and the amount of investment is measured on the horizontal axis. The investment demand curve has a negative slope reflecting the inverse relationship between the interest rate (the price of investing) and the aggregate quantity of investment goods demanded.
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If a single banks faces a required reserve ratio of 20 percent, has total reserves of $500,000 . and checkable deposit liabilities of $400,000 . what is the maximum amount of money this bank could create (add to the money supply)?
a. $420,000 b. $100,000. c. $80,000 d. $2,100,000.
The consumption function shows the relationship between real consumption spending and
a. real wealth b. the interest rate c. expectations d. real disposable income e. debt