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.

---

Definitions:

Executive Managers

Senior-level employees responsible for the strategic planning and direction of a company's operations.

Operating Income

A measure of a company's profit that excludes non-operating expenses such as interest and taxes, focusing on the profit generated from core business operations.

Strategic Performance Measurement System

A framework that integrates financial and non-financial performance indicators to assess an organization's effectiveness in achieving its strategic objectives.

Balanced Scorecard

A management and planning system designed to align a company's operations with its vision and strategic objectives, enhance communication both internally and externally, and track the performance of the organization in relation to its strategic targets.