If the federal government were to offer larger tax breaks on the purchase of new equipment for businesses, all other factors constant, we would expect to see:

Question

Quizplus · Accepted Answer

Larger tax breaks on the purchase of new equipment for businesses would encourage businesses to invest more in equipment, leading to increased production and revenue. This, in turn, would increase the demand for borrowed funds to finance these investments. As a result, bond investors would supply more funds by shifting the bond supply curve to the right.

If the Federal Government Were to Offer Larger Tax Breaks