What is the investment demand curve?
The investment demand curve is the graphical representation which depicts the shifts in willingness to invest.
If the investment demand curve shifts to the right, that will imply on an increase in demand. That shift would entirely depend on the current economic situation. With that in mind, investors decide to invest when the cost of the investment capital is less and vice versa. The factors that may contribute to the shift of the curve can be various: technological changes, taxes, cost of the investment capital, current economic activity.
It is more likely that businesses will be interested in investing in a project with constantly changing technologies. The more advanced the technology levels are, the higher is the shift in the money market gragh.
When it comes to businesses, the government can enforce certain tax structures on investors. Tax incentives given for new investments encourages people invest even more, which in turn may cause the rightward shift in the investment schedule.
The majority of investment is meant to replace the capital on hand; a larger capital will almost always increase investment. But at the same time, a larger capital stock is going to result in reduction of net investment for sure. The larger the exsisting capital, the less new investment will be needed to reach a certain level of capital the investors are aiming at.
Businesses need capital to provide people with services. A significant increase in production may up the demand for capital, which in turn can lead to even larger investment.
If one decides to become an investor, they definitely should familiarize themselves with the investment demand model, as it will give the basic information needed to make the right decision.
"What is the investment demand curve?" Custom-Writing, 12 Apr. 2020, custom-writing.org/qna/what-is-the-investment-demand-curve/.
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Custom-Writing.org. "What is the investment demand curve?" April 12, 2020. https://custom-writing.org/qna/what-is-the-investment-demand-curve/.
Custom-Writing.org. 2020. "What is the investment demand curve?" April 12, 2020. https://custom-writing.org/qna/what-is-the-investment-demand-curve/.
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