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, r , at which saving, S , equals desired investment, I . 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

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, r , at which saving, S , equals desired investment, I . 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

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, r , at which saving, S , equals desired investment, I . 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