6. Tax systems and savingThis question addresses the impact of saving on an economy by examining what happens if tax laws change to induce saving and how changes in taxlaws can discourage saving.The following graph shows the market for loanable funds.Show the impact of a change in the tax law that successfully encourages saving by shifting either the demand curve (D), the supply curve (S), orboth.INTEREST RATELOANABLE FUNDSS6.4.(?) A tax law change that successfully encourages saving willinterest rates, which leads toinvestment and economic growth.To understand better how changes in tax laws can affect saving, imagine that Eleanor, a student, plans to save $500 from her summer job buytextbooks next autumn. Eleanor's parents are so impressed with her plans that they offer to pay her an additional 40% interest per month on themoney she saves, which means that Eleanor is now earning a large rate of return on her saving. It turns out that Eleanor saves only $400 (before theinterest paid by her parents) from her summer job. This means that theeffect must be smaller than theeffectfor Eleanor in this case.

As per economics, the loanable fund's belief is a theory of the market interest rate. As per this…

6. Tax systems and saving This question addresses the impact of saving on an economy by examining what happens if tax laws change to induce saving and how changes in tax laws can discourage saving. The following graph shows the market for loanable funds. Show the impact of a change in the tax law that successfully encourages saving by shifting either the demand curve (D), the supply curve (S), or both. INTEREST RATE LOANABLE FUNDS S 6 - þ (?)

6. Tax systems and saving This question addresses the impact of saving on an economy by examining what happens if tax laws change to induce saving and how changes in tax laws can discourage saving. The following graph shows the market for loanable funds. Show the impact of a change in the tax law that successfully encourages saving by shifting either the demand curve (D), the supply curve (S), or both. INTEREST RATE LOANABLE FUNDS S 6 - þ (?)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Figure: Supply of Loanable Funds) Use Figure: Supply of Loanable Funds. When the interest rate rises from 6% to 8%, the: Interest -ate (%) 12 10 8 6 4 2 S 0 10 20 30 40 50 60 70 80 90 Loanable funds (billions of dollars) O quantity of loanable funds supplied falls by $20 billion. supply of loanable funds falls by $10 billion... quantity of loanable funds supplied rises by $20 billion. O supply of loanable funds rises by $20 billion.
4. Supply and demand for loanable funds The following graph shows the market for loanable funds in a closed economy. The upward-sloping orange line represents the supply of loanable funds, and the downward-sloping blue line represents the demand for loanable funds. INTEREST RATE (Percent) 12 11 10 9 8 2 1 0 Supply Demand 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 LOANABLE FUNDS (Billions of dollars) ?
N6 Assume the US market for loanable funds is in equilibrium. Describe how an increase in the federal budget deficit will, all else equal, affect (A) the equilibrium real interest rate, (B) the equilibrium quantity of loans exchanged, and (C) the level of private investment spending.
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7. Problems and Applications Q8 Suppose the government borrows $20 billion more next year than this year. The following graph shows the market for loanable funds before the additional borrowing for next year. Use the orange line (square point) to graph the new supply of loanable funds as a result of this government policy to borrow $20 billion more next year than this year. Interest Rate (Percent) 10 9 8 7 6 01 3 2 1 0 0 Demand 10 20 30 40 50 60 70 Loanable Funds (Billions of dollars) 80 Supply 90 100 New Supply ?
Please answer correct Don't answer by pen paper plz
4. The money supply, the loanable funds market, and interest rates Changes in the money supply affect the interest rate through changes in the supply of loans, Real GDP, the price level, and the expected inflation rate. True or False: The income effect describes a change in the interest rate due to a change in the Real GDP. True O False The following graph shows the supply and demand curves in the market for loanable funds. Consider an increase in the Real GDP. INTEREST RATE Adjust the following graph to show the effect of this increase in the Real GDP. QUANTITY OF LOANABLE FUNDS The liquidity effect The price-level effect SLE The income effect The expectations effect DLF ܘ ܘ Which of the following refer to changes that affect the demand for loanable funds but not the supply? Check all that apply. DLF SLF (?)
5. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.) Customize and control Google Chrome Supply Demand Supply Demand LOANABLE FUNDS (Billions of dollars) Scenario 1: Individual Retirement Accounts (IRAS) allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $5,000 per person. Now suppose there is an increase in the maximum contribution, from $5,000 to $8,000 per year. INTEREST RATE (Percent)
4. The market for loanable funds and government policy The following graph shows the loanable funds market. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Consider each scenario separately by returning the graph to its starting position when moving from one scenario to the next. (Note: You will not be graded on any changes you make to the graph.) INTEREST RATE (Percent) Supply LOANABLE FUNDS (Billions of dollars) Demand Demand Supply
44. An increase in the general price level in the economy a) Will increase the purchasing power of consumers' wealth and decrease consumption spending. b) Will increase demand for, and decrease supply of loanable funds, causing the interest rate to increase which in turn will cause investment spending to fall. c) Makes domestic goods more expensive than foreign goods than before which will tend to decrease exports and increase imports, thus lowering net exports. d) All the above e) Only (b) and (c) are true
37- What is the ratio of the change in savings to the change in income called? a) MRI B) APS NS) MPS D) NS TO) cY
14) What could explain what is happening in the graph to the right? a. The government has given investors an investment tax credit, increasing investors appetite for savings. b. The government has removed the tax protected status of IRA accounts, increasing savings. c. The government balances the interest rate Το r1 Eo E1 So $1 budget reducing its debt, and the "crowding out" effect disappears. business desire to obtain funds. 90 91 quantity of loanable funds d. A new technology makes industry much more productive, therefore increasing e. There are many things that could explain what the graph shows us, but we don't have enough information to decide on any of a. thru d. above.