The diagram below show the market for financial capital assuming that national income is constant at potential GDP, Y*.Real Interest RateFIGURE 2NSOI* 11 12 13NS111IDQuantity ofInvestmentand Saving ($)Refer to Figure 2. Suppose national saving is reflectedWhat is the effect in the market for financial capital?NS, and investment demand is reflected by loº. Now suppose the vernment implements a policy that increases investment tax credit.Select one:O a. Investment demand shifts to 1₁P and the quantity of national saving supplied rises to 1₁.O b.National saving shifts to NS₁, investment demand shifts to 1₁D, and the quantity of national saving rises to 1₁.O c.National saving shifts to NS₁, and the quantity of national saving supplied rises to 1₂.O d.There is no effect on NS or IP and the quantity of national saving supplied remains at I*.O e. Investment demand shifts to I₁P, national saving shifts to NS₁, and the quantity of national saving rises to 13.

Refer to Figure 2. Suppose national saving is reflected by NS, and investment demand is reflected by loº. Now suppose the government implements a policy that increases investment tax credit. What is the effect in the market for financial capital? Celect one: O a. Investment demand shifts to 1₁D and the quantity of national saving supplied rises to 1₁. O b. National saving shifts to NS₁, investment demand shifts to 1₁D, and the quantity of national saving rises to 1₁. National saving shifts to NS₁, and the quantity of national saving supplied rises to 1₂. Oc. Od. There is no effect on NS or ID and the quantity of national saving supplied remains at I*. O e. Investment demand shifts to 1₁D, national saving shifts to NS₁, and the quantity of national saving rises to 13.

Refer to Figure 2. Suppose national saving is reflected by NS, and investment demand is reflected by loº. Now suppose the government implements a policy that increases investment tax credit. What is the effect in the market for financial capital? Celect one: O a. Investment demand shifts to 1₁D and the quantity of national saving supplied rises to 1₁. O b. National saving shifts to NS₁, investment demand shifts to 1₁D, and the quantity of national saving rises to 1₁. National saving shifts to NS₁, and the quantity of national saving supplied rises to 1₂. Oc. Od. There is no effect on NS or ID and the quantity of national saving supplied remains at I*. O e. Investment demand shifts to 1₁D, national saving shifts to NS₁, and the quantity of national saving rises to 13.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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