What Is the Effect of an Increase in the Tax

question 22

Multiple Choice

What is the effect of an increase in the tax rate on interest income on the supply of and the demand for loanable funds?

• A) The supply curve shifts to the left, while the demand curve remains unchanged.
• B) The supply curve shifts to the right, while the demand curve remains unchanged.
• C) The supply curve remains unchanged, while the demand curve shifts to the left.
• D) The supply curve remains unchanged, while the demand curve shifts to the right.

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Definitions:

Close Account Year-End

The process of updating account balances and summarizing a company's financial activities to prepare for the next accounting period.

Interest Revenue

Income earned from lending funds or through investing in interest-bearing financial instruments.

Gain Sale Building

The profit realized from the sale of a building asset.

Balance Sheet

A report documenting an organization's financial status, including its assets, liabilities, and the equity owned by shareholders, as of a certain date.