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-The Figure Above Shows the Capital Market

Question 264

Essay

  -The figure above shows the capital market. a.Before the government takes any action,what is the interest rate and quantity of capital? b.Suppose the government imposes a tax of 25 percent on the income from capital.After the tax,what is the equilibrium interest rate and quantity of capital? What is the after-tax interest rate? c.In the figure,darken the area that equals the deadweight loss from the tax.
-The figure above shows the capital market.
a.Before the government takes any action,what is the interest rate and quantity of capital?
b.Suppose the government imposes a tax of 25 percent on the income from capital.After the tax,what is the equilibrium interest rate and quantity of capital? What is the after-tax interest rate?
c.In the figure,darken the area that equals the deadweight loss from the tax.

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a.The interest rate before the tax is ...

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