Of the following, the most likely effect of an increase in income tax rates would be to

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An increase in income tax rates would likely decrease disposable income, leading to a decrease in savings rates as individuals have less money to save. This decrease in savings would also decrease the supply of loanable funds, as there would be less money available for lending. With a decrease in the supply of loanable funds, interest rates would increase due to the increased demand for funds. Therefore, all of the above options (decrease in savings rate, decrease in supply of loanable funds, and increase in interest rates) would be likely outcomes of an increase in income tax rates.

Of the Following, the Most Likely Effect of an Increase