A tax law change that successfully encourages saving will interest rates, which leads to investment and economic growth. To understand better how changes in tax laws can affect saving, imagine that Larry, a student, plans to save $500 from his summer job to buy textbooks next autumn. Larry's parents are so impressed with his plans that they offer to pay him an additional 40% interest per month on the money he saves, which means that Larry is now earning a large rate of return on his saving. It turns out that Larry saves only $400 (before the interest paid effect must be smaller than the effect for Larry in this by his parents) from his summer job. This means that the case. G

A tax law change that successfully encourages saving will interest rates, which leads to investment and economic growth. To understand better how changes in tax laws can affect saving, imagine that Larry, a student, plans to save $500 from his summer job to buy textbooks next autumn. Larry's parents are so impressed with his plans that they offer to pay him an additional 40% interest per month on the money he saves, which means that Larry is now earning a large rate of return on his saving. It turns out that Larry saves only $400 (before the interest paid effect must be smaller than the effect for Larry in this by his parents) from his summer job. This means that the case. G

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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As the real interest rate falls: a) the supply of loanable funds increases. b) the quantity supplied of loanable funds decrease! c) more saving is supplied to the market. d) the supply of loanable funds decreases.
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