In the loanable funds model, a reduction in the investment tax would create an Group of answer choices excess demand of funds at the initial equilibrium interest rate. This excess demand would lead to a rise in the interest rate. excess demand of funds at the initial equilibrium interest rate. This excess demand would lead to a fall in the interest rate. excess supply of funds at the initial equilibrium interest rate. This excess supply would lead to a rise in the interest rate. excess supply of funds at the initial equilibrium interest rate. This excess supply would lead to a fall in the interest rate.

The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (gdp) and other macroeconomic variables. a business cycle is typically characterized by four phases—recession, recovery, growth, and decline—that repeat themselves over time. economists note, however, that complete business cycles vary in length. the duration of business cycles can be anywhere from about two to twelve years, with most cycles averaging six years in length. some business analysts use the business cycle model and terminology to study and explain fluctuations in business inventory and other individual elements of corporate operations. but the term "business cycle" is still primarily associated with larger (industry-wide, regional, national, or even international) business trends.