Consider an economy in the long run with real GDP equal to the level of potential output, Y*. A. Explain the slopes of the investment demand curve and the national saving curve. Why is the investment demand curve downward sloping?
A. Because an increase in the interest rate leads households to reduce their current consumption
B. Because a fall in the real interest rate increases the opportunity cost of investment
C. Because a rise in the real interest rate increases the opportunity cost of investment
D. Because an increase in the interest rate leads households to increase their current consumption
E. Because a fall in the real interest rate decreases the opportunity cost of investment
F. Because an decrease in the interest rate leads households to reduce their current consumption
G. Because a rise in the real interest rate decreases the opportunity cost of investment
H. Because an decrease in the interest rate leads households to increase their current consumption