Asked by
giselle tello
on Nov 16, 2024Verified
What would happen, all else equal, in the market for loanable funds if the government were to decrease the tax rate on interest income?
A) There would be an increase in the equilibrium quantity of loanable funds.
B) There would be a reduction in the equilibrium quantity of loanable funds.
C) There would be no change in the equilibrium quantity of loanable funds.
D) The change in loanable funds is uncertain.
Tax Rate
The rate at which the government taxes an individual or corporation's income or earnings.
Loanable Funds
The total resources or funds available for borrowing, typically within a nation's financial markets, where savers supply funds and borrowers demand them.
Interest Income
Earnings received from deposit accounts like savings, or from investments like bonds, calculated as a percentage of the principal.
- Explain how government policies and taxation influence the market for loanable funds.
Verified Answer
AA
Learning Objectives
- Explain how government policies and taxation influence the market for loanable funds.