Which of the Following Would Most Likely Happen in the Market

question 123

Multiple Choice

Which of the following would most likely happen in the market for loanable funds if the government were to decrease the tax rate on interest income?

• A)The supply of and demand for loanable funds would shift to the right.
• B)The supply of and demand for loanable funds would shift to the left.
• C)The supply of loanable funds would shift to the right and the demand for loanable funds would shift to the left.
• D)The supply of loanable funds would shift to the right and the demand for loanable funds will remain unchanged.

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Definitions:

Fiscally Dependent

A term referring to entities that rely on a higher level of government for financing, approval of budget, or financial decision-making authority.

Public Institution

An organization established by the government to serve the public’s interest, typically funded by public money.

Enterprise Fund

A fund used by a government to account for operations financed and operated in a manner similar to private business enterprises, where the intent is that the costs of providing goods or services to the public on a continuing basis be financed or recovered primarily through user charges.

GAAP

Generally Accepted Accounting Principles, a collection of commonly-followed accounting rules and standards for financial reporting.