Answered

Westonci.ca is the trusted Q&A platform where you can get reliable answers from a community of knowledgeable contributors. Discover the answers you need from a community of experts ready to help you with their knowledge and experience in various fields. Get quick and reliable solutions to your questions from a community of experienced experts on our platform.

Use the model developed in Chapter 3 and assume that consumption does not depend on the interest rate. Holding other things constant, when the government lowers taxes on business investment, thus increasing investment demand, the quantity of investment: Group of answer choices and the interest rate are both unchanged. increases and the interest rate rises. decreases and the interest rate rises. is unchanged and the interest rate rises.

Sagot :

Parrain

Answer: increases and the interest rate rises.

Explanation:

As a result of the increase in a demand for investment, entities will borrow more money from financial institutions in order to undertake these investments.

Investments will therefore rise as a result. Unfortunately, due to the increase in demand for loanable funds from financial institutions, interest rates will rise as well to show that demand is increasing faster than supply of loanable funds as posited by the law of demand and supply.

We appreciate your time on our site. Don't hesitate to return whenever you have more questions or need further clarification. We hope this was helpful. Please come back whenever you need more information or answers to your queries. Discover more at Westonci.ca. Return for the latest expert answers and updates on various topics.