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12 July, 15:44

If interest rate change, do we shift the investment demand curve or move along the curve. Explain why

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  1. 12 July, 16:03
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    When interest rate changes, it will cause a movement along the investment demand curve.

    Explanation:

    This is because the relation between interest rate and investment is similar to that between product and price (interest rate is price to purchase investment). The quantity of investment demanded is negatively related to the value of interest rate in the market. When the interest rate increases (price increases), the demanded quantity of investment decreases as they have to pay more for investment.
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