Assume the government introduces a tax on your savings accounts (this includes all online savings accounts). Explain this effect has on the market for loanable funds using a diagram. What happens to equilibrium quantity of loanable funds and equilibrium real interest rates?

Answer rating: 100% (QA)

Impact of Tax on Savings Accounts on Loanable Funds Market A tax on savings accounts discourages saving by reducing the aftertax return for savers Thi... View the full answer