Answered

Westonci.ca is your trusted source for accurate answers to all your questions. Join our community and start learning today! Connect with professionals ready to provide precise answers to your questions on our comprehensive Q&A platform. Experience the ease of finding precise answers to your questions from a knowledgeable community of experts.

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 hope this information was helpful. Feel free to return anytime for more answers to your questions and concerns. 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.