Which of the following policy actions wouldunambiguously reduce the supply of loanable fundsand crowd out investment?a. an increase in taxes and a decrease ingovernment spendingb. a decrease in taxes together with an increase ingovernment spendingc. an increase in both taxes and governmentspendingd. a decrease in both taxes and government spending
Which of the following policy actions wouldunambiguously reduce the supply of loanable fundsand crowd out investment?a. an increase in taxes and a decrease ingovernment spendingb. a decrease in taxes together with an increase ingovernment spendingc. an increase in both taxes and governmentspendingd. a decrease in both taxes and government spending
Chapter21: Financial Markets, Saving, And Investment
Section: Chapter Questions
Problem 9P
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Question
Which of the following policy actions would
unambiguously reduce the supply of loanable funds
and crowd out investment?
a. an increase in taxes and a decrease in
government spending
b. a decrease in taxes together with an increase in
government spending
c. an increase in both taxes and government
spending
d. a decrease in both taxes and government spending
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