are my answers correct? This question addresses the impact of saving on an economy by examining what happens if tax laws change to induce saving and how changes in taxlaws can discourage saving.The following graph shows the market for loanable funds.Show the impact of a change in the tax law that successfully encourages saving by shifting either the demand curve (D), the supply curve (S), orboth.INTEREST RATESD021DS(?) INTEREST RATELOANABLE FUNDSSDDoDSA tax law change that successfully encourages saving will decrease interest rates, which leads to moreinvestment and economic growth.To better understand how changes in tax laws can affect saving, suppose that Gabrielle, a rising third-year in college, plans to save $550 from hersummer job in order to buy textbooks for the upcoming fall semester. Gabrielle's parents are so impressed with her plans that they offer to pay her anadditional 30% interest per month on the money she saves, which means that Gabrielle is now earning a large rate of return on her saving. By theend of the summer, it turns out that Gabrielle saved only $450 (before the interest paid by her parents) from her job. This means that thesubstitutionincomeeffect must be bigger than theeffect for Gabrielle in this case.

In the market for loanable funds, interest rates are determined by supply and demand. The demand for…

This question addresses the impact of saving on an economy by examining what happens if tax laws change to induce saving and how changes in tax laws can discourage saving. The following graph shows the market for loanable funds. Show the impact of a change in the tax law that successfully encourages saving by shifting either the demand curve (D), the supply curve (S), or both. INTEREST RATE S D₁ D₂ 中。中。 (?