If other things are the same, will countries that tax less on saving have lower or higher interest rates and investment than other countries?
A) lower interest rates and higher investment
B) lower interest rates and lower investment
C) higher interest rates and higher investment
D) higher interest rates and lower investment

Question

Quizplus · Accepted Answer

Countries that tax less on saving typically encourage more saving among their population. This increased supply of savings in the financial markets tends to lower interest rates. Lower interest rates, in turn, make borrowing cheaper, which can lead to higher levels of investment.

If Other Things Are the Same, Will Countries That Tax