Economics (MindTap Course List)
Economics (MindTap Course List)
What do interest rates and the tax treatment of returns to capital have to do with economic growth?
Role of interest rates and tax treatment of returns to capital in economic growth.
The amount of capital availability mainly depends upon the change in interest rates and tax treatment of capital returns. Firms usually borrow money for purchasing of capital. When the rate of interest reduces, firms are enhanced to borrow more funds. This leads to employ more capital, which increases production and shifts the production function rightward. Thus, the LRAS curve also shifts in the same direction...
Chapter 17 Solutions
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