Choose all true statements on the saving, investment and loanable funds market in a closed economy. (choose 2) a. If the government opens up a budget deficit by cutting labor income tax, and workers save full proceeds of the tax cut, interest rate and investment do not change. O b. If the government opens up a budget deficit by cutting labor income tax, and workers spend additional income saved from the tax cut, national saving falls and interest rate rises. O C. An increase in corporate income tax will lead to a higher equilibrium interest rate. d. Tax incentives for saving will lead to higher interest rates and thus lower investments.
Choose all true statements on the saving, investment and loanable funds market in a closed economy. (choose 2) a. If the government opens up a budget deficit by cutting labor income tax, and workers save full proceeds of the tax cut, interest rate and investment do not change. O b. If the government opens up a budget deficit by cutting labor income tax, and workers spend additional income saved from the tax cut, national saving falls and interest rate rises. O C. An increase in corporate income tax will lead to a higher equilibrium interest rate. d. Tax incentives for saving will lead to higher interest rates and thus lower investments.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Please answer correct option explain plz
![Choose all true statements on the saving, investment and loanable funds market in a closed economy. (choose
2)
a. If the government opens up a budget deficit by cutting labor income tax, and workers save full proceeds
of the tax cut, interest rate and investment do not change.
b.
If the government opens up a budget deficit by cutting labor income tax, and workers spend additional
income saved from the tax cut, national saving falls and interest rate rises.
O c.
An increase in corporate income tax will lead to a higher equilibrium interest rate.
d. Tax incentives for saving will lead to higher interest rates and thus lower investments.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbc958f98-a3e4-4fb8-8288-1bd8b438dbee%2F30b8f512-2d73-47de-99c4-810bb02e9fce%2Fqbdmpqo_processed.png&w=3840&q=75)
Transcribed Image Text:Choose all true statements on the saving, investment and loanable funds market in a closed economy. (choose
2)
a. If the government opens up a budget deficit by cutting labor income tax, and workers save full proceeds
of the tax cut, interest rate and investment do not change.
b.
If the government opens up a budget deficit by cutting labor income tax, and workers spend additional
income saved from the tax cut, national saving falls and interest rate rises.
O c.
An increase in corporate income tax will lead to a higher equilibrium interest rate.
d. Tax incentives for saving will lead to higher interest rates and thus lower investments.
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