Use the following to answer questions:
-(Figure: Loanable Funds Market II)Use Figure: Loanable Funds Market II.Other things being equal,an increase in taxes on savings and investment income will shift _____ to the _____ and _____ the interest rate.

Question

Use the following to answer questions: 
-(Figure: Loanable Funds Market II)Use Figure: Loanable Funds Market II.Other things being equal,an increase in taxes on savings and investment income will shift _____ to the _____ and _____ the interest rate.

Quizplus · Accepted Answer

An increase in taxes on savings and investment income reduces the incentive to save, shifting the supply of loanable funds to the left, which increases the interest rate.

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