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Question: savers either buy bonds or make deposits in savings accounts...

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savers either buy bonds or make deposits in savings accounts at bank. Intdaly, the interest incone earned on bonds or deposits is taxed at a rate of 20%, Now suppose t Shift the approprnate curve on the graph to reflact ths change anable funds to This change in the tax treatment of interest income from saving causes the equilbrium interest rate in the market for lo ▼ and the level of investment spending to Shift the appropniate curve on the graph to reflect ths change without changing t

S. The market for loanable funds and government policy The folliowing graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. (Note: You wil not be graded on any changes you make to the graph) Demand Supply Suppy LOANABLE FUNDS (Bitions of oolars) Suppose savers either buy bonds or make deposits in savings accounts at banks, tnitialy, the interest income earned on bonds or deposits is taxed at a rate of 20s. Now succose there is an increase in the tax rate on interest income. from 20% to 2s.

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