CENGAGE |MINDTAP Q Search this course Homework (Ch 23) O X Back to Assignment Attempts 1 Keep the Highest 1 / 3 6. Tax systems and saving This question addresses the impact of saving on an economy by examining what happens if tax laws change to induce saving and how changes in tax laws can discourage saving. The following graph shows the market for loanable funds. Show the impact of a change in the tax law that successfully encourages saving by shifting either the demand curve (D), the supply curve (S), or both. ? O S D S REST RATEShow the impact of a change in the tax law that successfully encourages saving by shifting either the demand curve (D), the supply curve (S), or both. S D S INTEREST RATE D LOANABLE FUNDSA tax law change that successfully encourages saving will V interest rates, which leads to V investment and economic growth. To better understand how changes in tax laws can affect saving, suppose that Imani, a rising thirdyear in college, plans to save $550 from her summerjob in order to buy textbooks for the upcoming fall semester. Imani's parents are so impressed with her plans that they offer to pay her an additional 15% interest per month on the money she saves, which means that Imani is now earning a large rate of return on her saving. By the end of the summer, it turns out that Imani saved $650 (before the interest paid by her parents) from herjob. This means that the V effect must be bigger than the V effect for Imani in this case. Continue without saving