Other Things Equal, an Increase in the Productivity of Capital

question 182

Multiple Choice

Other things equal, an increase in the productivity of capital goods will

• A) increase the demand for loanable funds and decrease the equilibrium interest rate.
• B) increase the demand for loanable funds and increase the equilibrium interest rate.
• C) increase the supply of loanable funds and decrease the equilibrium interest rate.
• D) increase the supply of loanable funds and increase the equilibrium interest rate.

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Definitions:

Before-tax

A financial figure or situation measured without considering the effects of taxation.

Excise Tax

A tax levied on specific goods, services, or transactions, often with the aim of reducing their consumption or generating revenue for the government.

Demand Curve

Demand curve is a graphical representation of the relationship between the price of a good or service and the quantity demanded for a given period, typically showing an inverse relationship.

Supply Curve

A graphical representation depicting the relationship between the price of a good or service and the quantity of that good or service that suppliers are willing to offer for sale at that price.