Step 17: Where's your ID (investment demand curve)?

Investment Demand Curve (ID)

-shape?: downward sloping

-why?: interest rates high = fewer profitable investments, vice versa

Shifts in ID

• Cost of production
  -lower costs shifts ID to the right, vice versa
  
• Business taxes
  -lower business taxes shift ID to the right, vice versa
  
• Technological change
  -new technology shifts ID to the right
  -lack of technology shifts ID to the left
  
• Stock of Capital
  -if an economy is low on capital, ID shifts to the right, vice versa
  
• Expectations
  -positive expectations shifts ID to the right, vice versa

LRAS

• always vertical at FE
• represents a point on an economy's PPC
• doesn't change as PL changes
• What change it? The same things that change PPC outward
  -change in resources, technology, and economic growth