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.

---

Definitions:

Imports

The act of bringing goods or services into a country from abroad for sale.

Fiscal Policy

A government's strategy in managing its taxes and spending to influence the nation's economy.

Nondiscretionary

Relating to expenditure or investment decisions bound by specific rules or criteria, not subject to personal judgment or preference.

Political Negotiations

The process whereby representatives of groups or states with differing interests meet to discuss and attempt to resolve conflicts by reaching agreements.