A change in the tax laws that increases the supply of loanable funds will have a smaller effect on investment when
a. the demand for loanable funds is more elastic and the supply of loanable funds is more inelastic.
b. the demand for loanable funds is more inelastic and the supply of loanable funds is more elastic.
c. both the demand for and supply of loanable funds are more elastic.
d. both the demand for and supply of loanable funds are more inelastic.
b
You might also like to view...
Which of the following would not be studied by macroeconomists?
A. The effects of tax cuts on consumer spending. B. Factors affecting average wages in the U.S. economy. C. Inflation in developing countries. D. The worldwide operations of General Motors
According to the Application, the differential survival of the wealthy created an environment
A) which allowed for economic growth. B) where lower-class people could no longer afford to live in the country. C) that directly led to the demise of the British monarchy. D) which caused increased class warfare.
An important difference between the demand for a private good and the demand for a public good is that
A) the resources used to provide public goods are common resources or government owned; the resources used to produce private goods are all privately owned. B) individuals reveal their preferences for a public good but they do not have to reveal their preferences a private good. C) the demand for a private good produces consumption externalities; the demand for a public good produces production externalities. D) individuals reveal their preferences for a private good but they do not have to reveal their preferences for a public good.
Arguments in support of protectionism (and against free trade) include all of the following EXCEPT
A) new and troubled industries need to be protected until they acquire sufficient strength to compete equally against their foreign counterparts. B) jobs at home should be protected from cheap foreign labor. C) protectionism increase total domestic consumption possibilities. D) national security interests require that nations retain the ability to produce vital materials at home and avoid dependence upon potential enemies.