Why is the investment curve downward sloping?

Why does the investment curve slope downward?

The investment curve slopes downward because investment is lower the higher is the expected real interest rate. … The investment curve would shift to the right by a decline in the effective tax rate or a rise in expected future marginal product of capital.

What are the 3 reasons why demand curves slope downward?

Causes of Downward Sloping of Demand Curve

  • Law of diminishing the marginal utility.
  • Substitution effect.
  • Income effect.
  • New buyers.
  • Old buyers.

Is a downward slope negative or positive?

Straight lines that are downward sloping have negative slopes; curves that are downward sloping also have negative slopes. We know, of course, that the slope changes from point to point on a curve, but all of the slopes along these two curves will be negative.

Why is long-run aggregate supply vertical?

Why is the LRAS vertical? The LRAS is vertical because, in the long-run, the potential output an economy can produce isn’t related to the price level. … The LRAS curve is also vertical at the full-employment level of output because this is the amount that would be produced once prices are fully able to adjust.

Why is supply upward sloping 3 reasons?

A supply curve slopes upward primarily because of the profit motive. When the market price of a particular good rises following an increase in demand, it becomes more profitable for firms to respond by increasing their output.

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Why do demand curves slope down and to the right?

When price fall the quantity demanded of a commodity rises and vice versa, other things remaining the same. It is due to this law of demand that demand curve slopes downward to the right. … In other words, as a result of the fall in the price of the commodity, consumer’s real income or purchasing power increases.

How do you determine which slope is greater?

When you look at the two lines, you can see that the blue line is steeper than the red line. It makes sense the value of the slope of the blue line, 4, is greater than the value of the slope of the red line, . The greater the slope, the steeper the line. The next example shows a line with a negative slope.