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).

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter21: Financial Markets, Saving, And Investment

Section: Chapter Questions

Problem 9P

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