In the loanable funds model, 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.
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