Use the following to answer questions:
-(Figure: The Market for Loanable Funds II) Use Figure: The Market for Loanable Funds II. Other things being equal, an increase in taxes on savings and investment income will shift _____ to the _____ and _____ the interest rate.

Question

Use the following to answer questions: 
-(Figure: The Market for Loanable Funds II) Use Figure: The Market for Loanable Funds II. Other things being equal, an increase in taxes on savings and investment income will shift _____ to the _____ and _____ the interest rate.

Quizplus · Accepted Answer

An increase in taxes on savings and investment income decreases the incentive for saving, leading to a decrease in the supply of loanable funds. This shift to the left in the supply curve results in an increase in the interest rate.

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