Asked by
Blake Borden
on Nov 26, 2024
Verified
If Congress were to pass a law exempting interest on saving from taxation, the
A) supply of loanable funds would decrease and the equilibrium interest rate would rise.
B) supply of loanable funds would increase and the equilibrium interest rate would fall.
C) demand for loanable funds would increase and the equilibrium interest rate would rise.
D) equilibrium interest rate would be unaffected.
Exempting Interest
The act of not subjecting interest earnings to taxation under certain conditions.
Loanable Funds
This term refers to the funds available for borrowing in the economy, which includes savings and any capital available for lending to others for investment.
Taxation
The practice of a government collecting revenues from individuals and businesses to fund public services and infrastructure.
- Discern the provenance of loanable monies and their consequences on market behaviors.
- Assess the implications of changes in interest rates on saving and borrowing practices.
Verified Answer
KH
Learning Objectives
- Discern the provenance of loanable monies and their consequences on market behaviors.
- Assess the implications of changes in interest rates on saving and borrowing practices.