Question

qustion attached

somework Unzo Demand INTEREST RATE (Percent) LOANABLE FUNDS (Bilions of dollars) Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the interest income earned on bonds or deposits is taxed at a rate of 20%. Now suppose there is an increase in the tax rate on interest income, from 20% to 25% Shift the appropriate curve on the graph to reflect this change. and the This change in the tax treatment of interest income from saving causes the equilibrium interest rate in the market for loanable funds to level of investment spending to Scenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose the government implements a new investment tax credit. Shift the appropriate curve on the graph to reflect this change The implementation of the new tax credit causes the interest rate to and the level of saving to Scenario 3: Inity, the government's budget is balanced, then the government significantly increases spending on national s h out changing This change in spending causes the government to run a budget which national saving Shift the appropriate curve on the graph to reflect this change This causes the interest rate to the level of investment spending

Answer 1

Supply decreases New suppy Rise Seenasion 2: fall Implementation of investment to Credit. supply New demand Rise , Rise