Macroeconomics help help?

Question

An increase in an investment tax credit would create a

A.shortage at the former equilibrium interest rate. This shortage would lead to a rise in the interest rate.

B.shortage at the former equilibrium interest rate. This shortage would lead to a fall in the interest rate.

C.surplus at the former equilibrium interest rate. This surplus would lead to a rise in the interest rate.

D.surplus at the former equilibrium interest rate. This surplus would lead to a fall in the interest rate.

Answer 1

D.  The increase tax would lower investment .  At the current interest rate this will lead to a surplus, the supply is greater than the demand.  Thus the rate will fall to establish a new equilibrium.