The Canadian government introduced the Tax- Free Savings Account (TFSA) in 2009,which allows Canadians to earn tax- free investment returns on a limited amount of savings each year.In theory,and all else remaining equal,what do we expect the effect of such a policy to be on the market for financial capital?
A) The supply of saving curve shifts left,the equilibrium interest rate rises and investment decreases.
B) The investment demand curve shifts right,the equilibrium interest rate rises and investment rises.
C) There will be no effect on the market for financial capital.
D) The investment demand curve shifts left,the equilibrium interest rate falls and investment falls.
E) The supply of savings curve shifts right,the equilibrium interest rate falls and investment increases.
Correct Answer:
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