How would the equilibrium interest rate respond to a change from an income tax to a consumption tax?

Name: How would the equilibrium interest rate respond to a change from an income tax to a consumption tax?
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Quizplus · Accepted Answer

Under a consumption tax, people are encouraged to save more because they are not taxed on their savings, but rather on the goods and services they consume. This increases the supply of loanable funds, which, all other things held constant, lowers the equilibrium interest rate.

How Would the Equilibrium Interest Rate Respond to a Change