How does a decrease in the tax rate on income earned on saving affect saving, investment, the interest rate, and economic growth?

Q: A tax law change that successfully encourages saving will interest rates, which leads to investment…

A: Equilibrium in the loanable funds market occurs at the intersection of demand and supply curves of…

Q: What is investment? How is it related to national saving?

A: Investment refers to an action of purchasing assets or goods that are not consumed in the present…

Q: Graph the market for loanable funds such that current national saving is at a level of $500 million…

A: In market for loanable funds, equilibrium occurs where quantity of loanable funds demanded is equal…

Q: Explain how higher saving leads to a higher standard of living.

A: In neo classical economics it is assumed that saving is equal to the investment and an economy is at…

Q: Using the market for loanable fund diagram, show graphically how it affects interest rate and…

A: The market for loanable funds shows the supply and demand for loanable funds at various interest…

Q: Draw a correctly labeled graph of the loanable funds market showing the equilibrium real interest…

A: Loanable funds are the total amount of money that individuals and businesses in a given economy have…

Q: what is relationship between saving , capital formation and consuption ?

A: Capital formation is given by the amount of investment. In a closed economy without Government…

Q: Using a graph for the loanable funds market of this economy, show what are the effect on the…

A: The market for loanable funds describes how borrowing happens in the market. The supply of loanable…

Q: What is the impact of a change in the savings rate on the output?

A: When savings rate increases (decreases), people increase (decrease) current saving and decrease…

Q: What is national saving? What is privet saving ?what is public saving? How are these three variables…

A: National savings is given by the equation = National Income - Consumption - Government expenditure.…

Q: What are the implications of inequality between saving and investment in an economy?

A: Saving: It refers to the amount of money that is not being used by the people. The people will save…

Q: If there is a rise in the real interest rate, how does the quantity of loanable funds demanded…

A: In the loanable funds market, loanable funds are demanded by the firms or businesses because it is…

Q: Show the effect on the real interest rate and equilibrium quantity of loanable fUkds loanable funds…

A: Loanable funds market is basically a kind of place where borrowing and lending takes place. The…

Q: Briefly explain the yearly rate-of-return method that policyowners can use to determine the rate of…

A: A profit from an investment is referred to as a return. It includes any change in the investment's…

Q: Distinguish between saving and investment.

A: An important debate in macroeconomics relates to the relationship between saving and investment.…

Q: all else equal, what does a lower interest rate mean for firms? what does a lower interest rate…

A: Interest rate positively related with the savings and negatively related with the investment. When…

Q: Draw the diagram for the loanable funds model. Suppose the tax laws are altered to provide more…

A: Loanable funds include all types of credits that are available in the market to firms and households…

Q: Explain THREE (3) factors that can influence investment in an economy.

A: Investment is the process of adding to the stock of capital assets with the expectation of getting a…

Q: Show the effect on the real interest rate and equilibrium quantity of loanable funds of a decrease…

A: The graph is showing the decrease in supply and demand of loanable funds.

Q: In Classical theory, Saving may increase due to decrease in Interest Rate

A: Classical economists tend to maintain that the economy is always capable to achieve the natural…

Q: If there is a fall in the real interest rate, how does the quantity of loanable funds supplied…

A: The market in which borrowers and lenders meet is the loanable funds market.

Q: Suppose there are two types of investment in the economy: business fixed investment and residential…

A: The total amount of money that individuals and institutions in an economy have agreed to save and…

Q: The Economist article, "Low interest rates leave savers with few good options", states that savers…

A: Poeple save money for different reasons. Savings allow people to meet future expenses. Setting cash…

Q: not understanding how to show this

A: The increase in the household savings rate means that consumers will be willing to consume less and…

Q: Explain/Discuss Three ways that a reduced rate of interest influences real capital investment.

A: Real capital investment is the sum of money which is given to a company to achieve it business…

Q: If net personal taxes rise, what happens to private saving ? Public saving ?

A: In an economy, taxes refers to the expenditure by the people and revenue of the government because…

Q: The importance of income in determining savings has persisted since the time of Keynes. Why have…

A: Keynes: It refers to the economic theory under which economy's total spending and its effect are…

Q: an increase in the expected real interest rate tends to raise desired saving, but lower desired…

A: The change in the expected real interest rate affects the level of saving and investment in the…

Q: How will equilibrium real interest rate and equilibrium quantity of loans change?

A: Equilibrium in the market for loanable funds occurs where the quantity demanded and supplied of…

Q: Explain if the following statement regarding loanable funds market is CORRECT or INCORRECT. The…

A: In the loanable funds market, people interact to exchange monetary funds to transfer money from…

Q: Show how an increase in the supply of loanable funds and a decrease in the demand for loanable funds…

A: The following curves are drawn below:

Q: The following graph shows the market for loanable funds in a closed economy. The upward-sloping…

A: Demand for loanable funds is negatively related to interest rates. It means an increase in interest…

Q: Please explain how a rise in the household saving rate can cause a fall in GDP?

A: Gross domestic product is the monetary value of all total goods and services produced domestically…

Q: A closed economy has income of $1000, government spending of $200, taxes of $150, and investment of…

A: A closed economy is a type of economy in which the trading of goods and services won’t happen with…

Q: Explain why changes in government spending are viewed as nearly always affecting national saving,…

A: The financing cost acclimates to bring reserve funds and investment into balance. The upward line…

Q: a high interest rate can also indicate that something positive is happening in the economy. Describe…

A: A high interest rate can also indicate that something positive is happening in the economy.