Suppose government does not allow households to deduct their mortgage interest expenses from their income tax anymore. How this change is represented in the loanable funds model?
A) The supply of funds curve shifts to the left.
B) The supply of funds curve shifts to the right.
C) The demand for funds curve shifts to the left.
D) The demand for funds curve shifts to the right.
C
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Suppose that a bond promises to pay its holder $100 a year forever. If the price of the bond increases from $1,000 to $1,250, then the interest rate on the bond
A) falls from 10 percent to 8 percent. B) rises from 8 percent to 10 percent. C) does not change because it is not affected by the price of the bond. D) falls from 10 percent to 6 percent.
A measure of all the satisfaction you receive from all the coffee that you consume is your
A) marginal utility of coffee. B) marginal utility per dollar spent on coffee. C) total utility from coffee. D) marginal utility per dollar spent on coffee when you are in your consumer equilibrium.