Consider a loanable funds market of Pakistan. Suppose, if government want to implement the policy to provide incentives on savings by allowing people to shield their savings by opening Retirement Accounts with commercial banks. What is the effect of this policy on the market for loanable finds

1. Interest rate will  (Please write one word either increase or decrease in the blank).
2. Quantity of loanable funds will  (Please write one word either increase or decrease in the blank)

Now assume, the parliament passed a tax reform aimed at making investment more attractive—for instance, by instituting an investment tax credit. An investment tax credit gives a tax advantage to any firm building a new factory or buying a new piece of equipment What is the effect of this policy on the market for loanable finds

3. Interest rate will  (Please write one word either increase or decrease in the blank).
4. Quantity of loanable funds will  (Please write one word either increase or decrease in the blank)

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Their will be a increase in both the interest r... View the full answer