Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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

  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)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Their will be a increase in both the interest r... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Modern Principles of Economics

Authors: Tyler Cowen, Alex Tabarrok

3rd edition

1429278390, 978-1429278416, 1429278412, 978-1429278393

More Books

Students also viewed these Economics questions

Question

What is job rotation ?

Answered: 1 week ago