If Congress instituted an investment tax credit
A)it would make buying bonds more desirable,so the demand for loanable funds would shift.
B)it would make buying capital goods more desirable,so the demand for loanable funds would shift.
C)it would make buying bonds more desirable,so the supply of loanable funds would shift.
D)it would make buying capital goods more desirable,so the supply of loanable funds would shift.

Question

Quizplus · Accepted Answer

An investment tax credit would make buying capital goods more desirable, as it would reduce the cost of investment. This would lead to an increase in the demand for loanable funds, as firms would need to borrow more funds to finance their investment projects. Therefore, the answer is B.

If Congress Instituted an Investment Tax Credit