Suppose That a Country Has Only a Sales Tax

question 41

Multiple Choice

Suppose that a country has only a sales tax.Now suppose it replaces the sales tax with an income tax that includes a tax on interest income.This would make equilibrium

• A)interest rates and the quantity of loanable funds rise.
• B)interest rates rise and the quantity of loanable funds fall.
• C)interest rates fall and the quantity of loanable funds rise.
• D)interest rates and the quantity of loanable funds fall.

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Definitions:

Technology

The application of scientific knowledge for practical purposes, especially in industry.

Production Methods

Various techniques and processes used in the creation of goods and services, ranging from manual labor to advanced manufacturing technologies.

Standard Cost Systems

Accounting systems that use standards for each element of manufacturing cost entering into the finished product.

Product Costs

The total of direct materials, direct labor, and manufacturing overhead allotted to a product, representing the cost to produce goods.