Question

The investment demand slopes downward and to the right because lower real interest rates Multiple Choice expand consumer borrowing, making investments more profitable. boost expected rates of returns on investment. enable more investment projects to be undertaken profitably. create tax incentives to invest.

Answer 1

The investment demand slopes downward and to the right because lower real interest rates because C. enable more investment projects to be undertaken profitably.

Investment demand simply means the demand by businesses for the services and the physical capital goods that are used to maintain the operations or expansion of a business.

It should be noted that when there's a fall in interest rate, there'll be an increase in investment demand. This then results in a multiplier effect on consumption and leads to a rise in the national income.

In conclusion, lower real interest rates because enable more investment projects to be undertaken profitably.

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