Why investment curve slopes downward in thesaving-investment

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Problem: Explain why the investment curve slopes downward in thesaving-investment diagram. Explain why the investment curve slopes downward in thesaving-investment diagram. Higher interest rates increase the user cost of capital thus reducing the desired capital stock. Higher interest rates lead to an increase in the per-unit price of capital. Higher interest rates reduce the productivity of capital thus reducing the desired capital stock. Higher interest rates increase the gap between gross and net investment.

Reference no: EM133659639

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