Suppose the Canadian government allowed taxpayers to earn their first $5000 interest free of income tax. How would this shift the supply of, or demand for, loanable funds?

Question

Quizplus · Accepted Answer

Allowing taxpayers to earn their first $5000 interest free of income tax would increase their income after taxes. As a result, they would have more disposable income to save and invest, increasing the supply of loanable funds. This would shift the supply curve to the right.

Suppose the Canadian Government Allowed Taxpayers to Earn Their First