Part 1 - Use the loanable funds market to graphically show how real interest rate (r), saving (S) and investment (I) would change when the goverment increase the tax rate on interest income. Explain in detail.

Part 2 - Use the loanable funds market to graphically show how real interest rate (r), saving (S) and investment (I) would change when the goverment cut the tax rate on corporate prot. Explain in detail.

Answer rating: 100% (QA)

Part 1 Tax Increase on Interest Income Loanable Funds Market Impact A tax increase on interest income from savings accounts discourages saving by reducing the aftertax return Lets analyze this in the ... View the full answer