s pual to 20,00% coionaqual to 15,000, government purchases epivae saving public
ID: 1163111 • Letter: S
Question
s pual to 20,00% coionaqual to 15,000, government purchases epivae saving public saving, and national saving? alEa 400 and xs ap 2000, 1,000and 2,000 rospectoively 4 Whwouild hagpen in the market for loanable 2000-1,000 and 1,000 respectively the funds if the goverament were to increase the tax on interest scome? The spply of laanablefandswold shift right The demand fer laable unds would shift right. The supply of loanable funds would shift left. d The demand for loanable funds would shift lef Sippose goveent expenditures on goods and services and net more than ner taxes The effects of these changes on the budget deficit cause ares both decrease, and expenditures fall by teres rate and the equilibrium quantity of loanable funds to fall beth he equibrium inerest rate and the equilbrium quantity of loanable funds to rise. the oqulbriun intcrest rate to rise and the equilbrium quantity of loanable funds to fall. d the equilibeium i 6 Which of the folowing events could explain an increase in interest rates together with an increase in investment? nterest rate to fall and the equilibrium quantity of loanable funds to rise. The governament runs a larger deficit. h The government institutes an investment tax credit. The governmens rxplaces the income tax with a consumption tax. d Nooe of the above is correct 37. The set of items that serve as media of exchange clearly includes baiences that e behind debit cards b.demand deposits. c.other cbeckable deposits. d All of the above are correct. 3 Ash rserve ratio decreass, the money multiplier a increases. .does not change. c. decreases. d.could do any of the above.Explanation / Answer
33) c is correct
Private savings= gdp - consumption - taxes
= 20000-15000-3000= 2000
Public savings= taxes - government spending
= 3000-4000= -1000
National savings= private savings + public savings
= 2000-1000= 1000
34) c is correct
Lenders get interest income on amout lent. When tax on their ibterest income increases they lend less which reduces supply of loanable funds in the market and shifts the supply curve leftwards.
35) a is correct
When government spending decreases more than decrease in taxes, budget deficit falls and government demand less loans. This leads to decrease in interest rate and quantity of loanable funds.
36) b is correct
Investment tax credit is a decrease in tax rate if you invest more. This encourages investment and increase in investment demand leads to increase in interest rate.
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