Question

The annual return to savings is currently $100 billion per year in a certain nation. The estimated value of wealth in the nation is $1 trillion. Calculate the percentage gross return to savings. Assuming that the supply of saving is perfectly inelastic, calculate the impact of a 1 percent tax on wealth on the gross and net percentage return to savings. How would your answer differ if the interest elasticity of supply of savings were positive rather than zero?


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  • CreatedAugust 22, 2015
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