Shape?
-Downward sloping
Why?
-When interest rates are high, fewer investments are profitable; when interest rates are low more investments are profitable.
changes in r% causes changes in Ig. Factors other than r% may shift entire ID curve.
-Cost of production
*Lower cost shifts ID to the right. (Vice Versa)
-Business taxes
*Lower Shits ID to the right. (Vice Versa)
-Technology change
*New technology shifts ID to the right,
*Lack of technology change shifts ID to the left.
-Stock of capital
*If economy is low on capital ID shifts to the right.
*If economy has much capital ID shifts to the left.
-Expectations
*Positive expectations ID shifts to the right. (Vice Versa)
Long run AS
-It is always vertical at full employment
-It represents a point on the economies production possibility curve
-Does not change as the price level changes, only thing that changes long run AS is the same things that change PPC outwards.
*Resources
*Technology
*Economic Growth.
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