question archive Suppose the government announces it will pay for half of any new investment undertaken by firms
Subject:EconomicsPrice:2.87 Bought7
Suppose the government announces it will pay for half of any new investment undertaken by firms. How will this affect the investment demand curve?

Answer:
If government announces it will pay for half of any new investment undertaken by firms,the investment demand curve will shift rightward. Because the government incentives will induce the firms to invest more and receive incentives which will lead to a shift in the investment demand curve to the right.

