INVESTMENT DEMAND: The negative relation between investment expenditures and the interest rate, based on the marginal efficiency of investment for different capital investment projects. Business firms generally compare the expected return on physical capital (the marginal efficiency of investment) with the return on financial capital (the interest rate). Should the marginal efficiency of investment be greater than or equal to the interest rate, then the capital investment is undertaken. Because more investment projects exist with lower rates of return than higher, the relation between interest rates and investment expenditures is negative.

     See also | investment expenditures | interest rate | marginal efficiency of investment | physical capital | financial capital | investment demand curve | Keynesian economics |

INVESTMENT DEMAND, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2023. [Accessed: December 8, 2023].

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In terms of macroeconomic analysis, especially the aggregate market (AS-AD) analysis, a period of time in which some prices, notably wages, are rigid, inflexible, or otherwise in the process of adjusting. This is one of two macroeconomic time designations; the other is the long run. Short-run wage and price rigidity prevents some markets, especially resource markets and most notably labor markets, from achieving equilibrium. Wage and price rigidity and the resulting resource market imbalances are the source of the positively-sloped short-run aggregate supply curve.

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