Which of the following would shift the demand for loanable funds to the right?
A)income tax increases
B)government expenditures increase
C)the interest rate falls
D)Congress and the president pass an investment tax credit

Question

Quizplus · Accepted Answer

If Congress and the president pass an investment tax credit, it would encourage more investment and borrowing, leading to an increase in the demand for loanable funds and a rightward shift in the demand curve. Option A, income tax increases, would reduce disposable income, leading to a decrease in demand for loanable funds, shifting the curve to the left. Option B, an increase in government expenditures, would lead to a decrease in savings and an increase in demand for loanable funds, shifting the curve to the right. Option C, a fall in the interest rate, would increase the supply of loanable funds (as people would be more willing to save/invest at lower interest rates), and shift the demand for loanable funds to the left.

Which of the Following Would Shift the Demand for Loanable