Ask Question
BusinessBusiness
7 September, 13:12

Suppose a government that taxed all interest income changed its tax law so that the first $5,000 of a taxpayer's interest income was tax free. This would shift the ...

a. supply of loanable funds to the right, causing interest rates to fall.

b. supply of loanable funds to the left, causing interest rates to rise.

c. demand for loanable funds to the right, causing interest rates to rise.

d. demand for loanable funds to the left, causing interest rates to fall.

+2
Answers (1)
  1. 7 September, 16:43
    0
    The correct answer is option a.

    Explanation:

    Suppose the government used to tax incomes.

    But a change in law will exempt tax for the first $5,000 of interest income.

    This means that the income from providing loans will increase and the cost of supplying funds will decline. This will cause an increase in the supply of loanable funds. As a result, the supply for loanable funds curve will shift to the right. This rightward shift will cause the interest rate to fall.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Suppose a government that taxed all interest income changed its tax law so that the first $5,000 of a taxpayer's interest income was tax ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Malik's grandfather has loaned him $110,000 toward opening a restaurant and has told Malik that the loan is interest-free. Why might this be a problem? The loan is for too much money. Malik shouldn't borrow money from his relatives.
Answers (1)
Which of the following statements is incorrect? (A) An activity-based costing system uses more cause-and-effect relationships in tracing costs than does a traditional cost allocation system.
Answers (1)
Did Lowe's have more (or less) cash than The Home Depot at the end of ""Fiscal 2016""?
Answers (1)
What does it mean to buy on credit
Answers (2)
Each with $35,500 in their partnership capital accounts. kwon is admitted to the partnership by investing $35,500 cash. prepare the entry to show kwons admission to the partnership.
Answers (1)
New Questions in Business
How to train employees on principle based decision making?
Answers (1)
Harvey automobiles uses a standard part in the manufacture of several of its trucks. the cost of producing 90,000 parts is $130,000, which includes fixed costs of $70,000 and variable costs of $60,000.
Answers (1)
Gracius Manufacturing is approached by a European customer to fulfill a oneminustimeminusonly special order for a product similar to one offered to domestic customers.
Answers (1)
True or false: Regardless of the inventory costing method used, the financial statements will always report the same amount of inventory on the balance sheet and cost of goods sold on the income statement.
Answers (1)
Some newspapers have dubbed kane kramer as one of the" biggest losers" in business history, explain whether you think this is fair or unfair.?
Answers (1)
Home » Business » Suppose a government that taxed all interest income changed its tax law so that the first $5,000 of a taxpayer's interest income was tax free. This would shift the ... a. supply of loanable funds to the right, causing interest rates to fall. b.
Sign Up Forgot Password?