10. The determination of goods market equilibrium, for any supply of output Y is represented graphi- cally by the saving-investment diagram. The saving curve slopes upward because empirical evidence suggests that a higher real interest rate raises desired saving. The investment curve slopes downward because a higher real interest rate raises the user cost of capital, which lowers firms’ desired capital stocks and, thus, the amount of investment they do. At constant output, changes in variables that affect desired saving or investment shift the saving or investment curves and change the real interest rate that clears the goods market.