When Will a Change in the Tax Laws That Increases

question 5

Multiple Choice

When will a change in the tax laws that increases the supply of loanable funds have a bigger effect on investment?

• A) when the demand for loanable funds is more elastic and the supply of loanable funds is more inelastic
• B) when the demand for loanable funds is more inelastic and the supply of loanable funds is more elastic
• C) when both the demand for and supply of loanable funds are more elastic
• D) when both the demand for and supply of loanable funds are more inelastic

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Definitions:

Gross Investment

The total amount spent on purchases of new capital assets plus replacement of worn-out or obsolete assets.

Gross National Income

The total domestic and foreign output claimed by residents of a country, including wages, salaries, and property income.

Gross Domestic Product

The sum value in currency or market terms of every finished product and service created within a country during a specified period.

Economic Growth

An increase in the production of goods and services in an economy over a period of time, often measured by GDP growth.