This change causes savers to supply of loanable funds demanded, there is quantity of loanable funds demanded. loanable funds. Because the quantity of loanable funds supplied is now pressure on interest rates. This change in interest rates causes a(n) the quantity in the
This change causes savers to supply of loanable funds demanded, there is quantity of loanable funds demanded. loanable funds. Because the quantity of loanable funds supplied is now pressure on interest rates. This change in interest rates causes a(n) the quantity in the
Chapter21: Financial Markets, Saving, And Investment
Section: Chapter Questions
Problem 9P
Related questions
Question
![For each of the given scenarios, use the graphs to (1) show what happens in the market for loanable funds and (2) help answer the questions that
follow.
Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at depository institutions. Initially, the interest income earned on
bonds or deposits is taxed at a rate of 20%. Now suppose there is an increase in the tax rate on interest income, from 20% to 25%.
INTEREST RATE
Market for Loanable Funds
SA
LOANABLE FUNDS
This change causes savers to supply
of loanable funds demanded, there is
quantity of loanable funds demanded.
DA
| * ¢ **
?
loanable funds. Because the quantity of loanable funds supplied is now
pressure on interest rates. This change in interest rates causes a(n)
the quantity
in the](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0e9d7188-be96-40e5-887a-a0053b11645a%2F33994e23-c70c-4c29-82fd-81e45d4bcadd%2Fyfyftkf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:For each of the given scenarios, use the graphs to (1) show what happens in the market for loanable funds and (2) help answer the questions that
follow.
Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at depository institutions. Initially, the interest income earned on
bonds or deposits is taxed at a rate of 20%. Now suppose there is an increase in the tax rate on interest income, from 20% to 25%.
INTEREST RATE
Market for Loanable Funds
SA
LOANABLE FUNDS
This change causes savers to supply
of loanable funds demanded, there is
quantity of loanable funds demanded.
DA
| * ¢ **
?
loanable funds. Because the quantity of loanable funds supplied is now
pressure on interest rates. This change in interest rates causes a(n)
the quantity
in the
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