The economy begins in equilibrium at Point E, representing the real interest rate, r1, at which saving, S1, equals desired inves
tment, I1. What will be the new equilibrium combination of real interest rate, saving, and investment if there is a tax law change that makes investment projects less profitable and decreases the demand for investment goods (but does not change the amount of taxes collected in the economy)?
1 answer:
Answer:
reduction in investment, savings and interest rate
Explanation:
A change in factors other than the interest rate causes a shift in the investment demand curve also known as IS curve. The change in tax law which reduces the demand for investment goods will cause the IS curve to shift left from IS1 to IS2 this will shift the equilibrium from E to E1. This will reduce the real interest rate from R1 to R2. A decrease in interest rate will also decrease the saving from S1 to S2 and Investment is already reduced from I1 to I2.
Note: Graph file is attached
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Price = $20
Variable cost = $12
Therefore the contribution margin = price - variable cost = 20 - 12 = $8.
The contribution margin is used to pay the total fixed costs. Since these costs equal $6000, the factory needs to sell the following amount of products:
Therefore, the total break-even revenue = price * break-even amount = 20 * 750 = $15,000
Hence, the correct answer is D. $15,000
Variable cost = $12
Therefore the contribution margin = price - variable cost = 20 - 12 = $8.
The contribution margin is used to pay the total fixed costs. Since these costs equal $6000, the factory needs to sell the following amount of products:
Therefore, the total break-even revenue = price * break-even amount = 20 * 750 = $15,000
Hence, the correct answer is D. $15,000
When there is a shift in aggregate demand from AD2 to AD3 in Exhibit 16-5, this d. increases real GDP, and raises the price level.
<h3>What happens when aggregate demand shifts to AD3?</h3>The shift from AD2 to AD3 is a rightward shift which points to the fact that real GDP is increasing.
This would lead to a higher price level because AD3 will intersect with the aggregate supply curve at a higher price.
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Find out more on the aggregate supply curve at brainly.com/question/13867740.
