An increase in taxes on interest income ________ supply of loanable funds curve and ________ the demand for loanable funds curve.

Question

Quizplus · Accepted Answer

An increase in taxes on interest income decreases the after-tax return on savings, which discourages saving and thus shifts the supply of loanable funds curve to the left. It does not directly affect the demand for loanable funds, which is primarily determined by borrowers' needs for investment.

An Increase in Taxes on Interest Income ________ Supply of Loanable