(Exhibit: Saving, Investment, and the Interest Rate 2) Reference: Ref 3-2 (Exhibit: Saving, Investment, and the Interest Rate 2) The economy begins in equilibrium at
Point E, representing the real interest rate, r₁ , at which saving, S₁ , equals desired
Investment, I₁ . What will be the new equilibrium combination of real interest rate, saving, and
Investment if there is a tax law change that makes investment projects less profitable and decreases the demand for investment goods (but does not change the amount of taxes collected in the economy) ?

Question

(Exhibit: Saving, Investment, and the Interest Rate 2)

Reference: Ref 3-2

(Exhibit: Saving, Investment, and the Interest Rate 2) The economy begins in equilibrium at
Point E, representing the real interest rate, r₁ , at which saving, S₁ , equals desired
Investment, I₁ . What will be the new equilibrium combination of real interest rate, saving, and
Investment if there is a tax law change that makes investment projects less profitable and decreases the demand for investment goods (but does not change the amount of taxes collected in the economy) ?

Quizplus · Accepted Answer

The Answer of (Exhibit: Saving, Investment, and the Interest Rate 2) Reference: Ref 3-2 (Exhibit: Saving, Investment, and the Interest Rate 2) The economy begins in equilibrium at Point E, representing the real interest rate, r₁ , at which saving, S₁ , equals desired Investment, I₁ . What will be the new equilibrium combination of real interest rate, saving, and Investment if there is a tax law change that makes investment projects less profitable and decreases the demand for investment goods (but does not change the amount of taxes collected in the economy)? A)Point A B)Point B C)Point C D)Point D