INTEREST RATE (Percent) m > 0 80 120 160 LOANABLE FUNDS (Dollars) y D₂ d Refer to Figure 26-4. Starting at point A, a change in tax laws that encouraged households to save more would likely cause the quantity of loanable funds traded to increase to $160 and the interest rate to fall to 4% (point D). increase to $160 and the interest rate to rise to 7% (point C). decrease to $80 and the interest rate to fall to 4% (point B). decrease to $80 and the interest rate to rise to 7% (point E).

INTEREST RATE (Percent) m > 0 80 120 160 LOANABLE FUNDS (Dollars) y D₂ d Refer to Figure 26-4. Starting at point A, a change in tax laws that encouraged households to save more would likely cause the quantity of loanable funds traded to increase to $160 and the interest rate to fall to 4% (point D). increase to $160 and the interest rate to rise to 7% (point C). decrease to $80 and the interest rate to fall to 4% (point B). decrease to $80 and the interest rate to rise to 7% (point E).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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#18. What would happen in the market for loanable funds if the government were to increase the tax on interest income? a The supply of loanable funds would shift right. b The demand for loanable funds would shift right. c The supply of loanable funds would shift left. d The demand for loanable funds would shift left.
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