In the Loanable Funds Model,an Increase in an Investment Tax

question 118

Multiple Choice

In the loanable funds model,an increase in an investment tax credit would create a

• A)shortage at the former equilibrium interest rate.This shortage would lead to a rise in the interest rate.
• B)shortage at the former equilibrium interest rate.This shortage would lead to a fall in the interest rate.
• C)surplus at the former equilibrium interest rate.This surplus would lead to a rise in the interest rate.
• D)surplus at the former equilibrium interest rate.This surplus would lead to a fall in the interest rate.

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Definitions:

Type I Error

The incorrect rejection of a true null hypothesis, also known as a "false positive."

Type II Error

Occurs when a statistical test fails to reject a false null hypothesis, also known as a false negative.

Null Hypothesis

A hypothesis that states there is no statistical significance between the two variables in the hypothesis. It posits no effect or no difference as a default stance to be tested against.

Alternative Hypothesis

A statement that contradicts the null hypothesis and proposes that there is a statistically significant relationship between two variables.