Scenario 2: An investment tax credit effectively lowers the taxes paid by firms that purchase new equipment or build a new manufacturing facility Suppose the government implements a new investment tax credit ols 2 Market for Loanable Fueds DA E7 nited INTEREST RATE ON LOANABLE FUNDS The implementation of a new tax credit causes borrowers to demand less now the quantity of loanable funds supplied, there is In the quantity of Sonnable funds supplied Joanable funds. Because the quantity of loanable funds demanded is pressure on interest rates. This change in interest rates