Scenario 32-2 ​

question 105

Essay

Scenario 32-2
​
Due to concerns about a rising level of debt relative to GDP, Congress and the President cut expenditures and raise taxes.
-Refer to Scenario 32-2. What does this policy change do to the equilibrium values of the interest rate and the quantity of loanable funds?

---

Definitions:

Joint Proprietorship

A business ownership structure where two or more individuals share the ownership, responsibilities, and liabilities of the business.

Partnership

A business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Agreement.

Income Tax Return

A document filed with tax authorities detailing income earned, tax deductions taken, and taxes owed for the year.

Entity

Any organization, institution, or being that has a distinct existence, legally recognized as capable of rights and duties.