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An investment tax credit will cause A. the demand for loanable funds to increase. B. the...

An investment tax credit will cause

A. the demand for loanable funds to increase.

B. the supply of loanable funds to increase

C. Both A and B

D. None of the above

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Answer #1

An investment tax credit will lead to lower cost of borrowing money at all possible real interest rate. Thus an investment tax credit would result in the demand for loanable funds to increase.

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