How Would the Equilibrium Interest Rate Respond to a Change

question 25

Multiple Choice

How would the equilibrium interest rate respond to a change from an income tax to a consumption tax?

• A)The equilibrium interest rate would rise.
• B)The equilibrium interest rate would fall.
• C)The equilibrium interest rate would be unaffected.
• D)The equilibrium interest rate may rise or fall based on whether the demand or supply of loanable funds changes.

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Definitions:

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