What would most likely happen in the market for loanable funds if the government were to decrease the tax on interest income?

Question

Quizplus · Accepted Answer

When the government decreases the tax on interest income, individuals will have more incentive to save and invest. This will cause an increase in the supply of loanable funds (savings) and a decrease in the demand for loanable funds (as more individuals are able and willing to lend their money). As a result, the equilibrium interest rate will decrease, and both investment and savings will rise.

What Would Most Likely Happen in the Market for Loanable