A change from an income tax to a value added tax on consumption
A) should decrease the supply of loanable funds.
B) would decrease the demand for loanable funds.
C) should increase the supply of loanable funds.
D) should shift consumers' preferences toward consumption.

Question

Quizplus · Accepted Answer

A value added tax (VAT) on consumption would likely increase savings as consumers may choose to save more to avoid the tax, thereby increasing the supply of loanable funds.

A Change from an Income Tax to a Value Added