If,in an economy experiencing inflation,the government decided to tax real interest income rather than nominal interest income,this change would cause the real interest rate to ________ and the equilibrium quantity of loanable funds to ________.

Question

Quizplus · Accepted Answer

If the government taxes real interest income, the after-tax real interest rate will be lower, which will reduce the quantity of loanable funds supplied.

If,in an Economy Experiencing Inflation,the Government Decided to Tax Real