Which of the Following Events Could Explain an Increase in Interest

question 167

Multiple Choice

Which of the following events could explain an increase in interest rates together with an increase in investment?

• A)The government runs a larger deficit.
• B)The government institutes an investment tax credit.
• C)The government replaces the income tax with a consumption tax.
• D)None of the above is correct.

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Definitions:

Marginal Cost

The cost incurred from producing an additional unit of a product.

Average Variable Cost

The total variable costs (costs that change with the level of output) divided by the quantity of output produced, indicating the cost of producing an additional unit.

Marginal Cost

The boost in expenditure linked to creating an additional unit of a good or service.

Average Total Cost

Refers to the sum of all production costs divided by the total output produced, indicating the cost per unit of producing a good or service.