Use the model developed in Chapter 3 and assume that consumption does not depend on the interest rate. Holding other things constant, when the government lowers taxes on business investment, thus increasing investment demand, the quantity of investment:
A)increases and the interest rate rises.
B)is unchanged and the interest rate rises.
C)and the interest rate are both unchanged.
D)decreases and the interest rate rises.

Question

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The Answer of Use the model developed in Chapter 3 and assume that consumption does not depend on the interest rate. Holding other things constant, when the government lowers taxes on business investment, thus increasing investment demand, the quantity of investment:
A)increases and the interest rate rises.
B)is unchanged and the interest rate rises.
C)and the interest rate are both unchanged.
D)decreases and the interest rate rises.

Use the Model Developed in Chapter 3 and Assume That