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PLEASE PAY CLOSE ATTENTION TO QUESTIONS, they all have parts and I have the question number next to screenshots to show which number question it
PLEASE PAY CLOSE ATTENTION TO QUESTIONS, they all have parts and I have the question number next to screenshots to show which number question it is. Please just provide answer, make sure to label question number and the answers.
5. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.) /'\\ [\\Z/ 0 Supply Demand .3 El I: E g; Sunply E - - - - - - - - -+ E . a I E I '2 I Demand - I I I I I I LOANABLE FUNDS (Billions 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 a decrease in the tax rate on interest income, from 20% to 15%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to V and the level of investment spending to V . 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 reect this change. The implementation of the new tax credit causes the interest rate to V and the level of saving to V . Scenario 3: Initially, the government's budget is balanced; then the government significantly increases spending on national defense without changing taxes. This change in spending causes the government to run a budget V , which V national saving. Shift the appropriate curve on the graph to reect this change. This causes the interest rate to Y , V the level of investment spending. 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 a decrease in the tax rate on interest income, from 20% to 15%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to V and the level of investment spending to V . Scenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the rel e 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 V and the level of saving to V . Scenario 3: Initially, the government's budget is balanced; then the government significantly increases spending on national defense without changing taxes. This change in spending causes the government to run a budget V , which V national saving. Shift the appropriate curve on the graph to reect this change. This causes the interest rate to Y , V the level of investment spending. 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 a decrease in the tax rate on interest income, from 20% to 15%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to V and the level of investment spending to V . Scenario 2: nt tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose the government 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 V and the level of saving to V . Scenario 3: Initially, the government's budget is balanced; then the government significantly increases spending on national defense without changing taxes. This change in spending causes the government to run a budget V , which V national saving. Shift the appropriate curve on the graph to reect this change. This causes the interest rate to Y , V the level of investment spending. 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 a decrease in the tax rate on interest income, from 20% to 15%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to V and the level of investment spending to V . 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 _V _ and the level of saving to V . Scenario 3: Initially, the government's budget is balanced; then the 'n ent significantly increases spending on national defense without changing This change in spending causes the government to run a budget V , which V national saving. Shift the appropriate curve on the graph to reect this change. This causes the interest rate to Y , V the level of investment spending. 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 a decrease in the tax rate on interest income, from 20% to 15%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to V and the level of investment spending to V . 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 V and the level of saving to V . Scenario 3: Initially, the government's budget is balanced; then the government significantly increa -ing on national defense without changing taxes. This change in spending causes the government to run a budget V , which V national saving. Shift the appropriate curve on the graph to reect this change. This causes the interest rate to Y , V the level of investment spending. 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 a decrease in the tax rate on interest income, from 20% to 15%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to V and the level of investment spending to V . 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 V and the level of saving to V . Scenario 3: Initially, the government's budget is balanced; then the government significantly increases spending on national defense without changing taxes. This change in spending causes the government to run a budget V , which V national saving. Shift the appropriate curve on the graph to reect this change. surplus This causes the interest rate to Y , V the Ie - stment spending. 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 a decrease in the tax rate on interest income, from 20% to 15%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to V and the level of investment spending to V . 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 V and the level of saving to V . Scenario 3: Initially, the government's budget is balanced; then the government significantly increases spending on national defense without changing taxes. This change in spending causes the government to run a budget V , which V national saving. decreases Shift the appropriate curve on the graph to reect this change. increases This causes the interest rate to Y , V the level of investment spe . 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 a decrease in the tax rate on interest income, from 20% to 15%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to V and the level of investment spending to V . 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 reect this change. The implementation of the new tax credit causes the interest rate to V and the level of saving to V . Scenario 3: Initially, the government's budget is balanced; then the government significantly increases spending on national defense without changing taxes. This change in spending causes I - . - ernment to run a budget V , which V national saving. Shift the appropriate curve on to reect this change. This causes the interest rate to Y , V the level of investment spending. 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 a decrease in the tax rate on interest income, from 20% to 15%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to V and the level of investment spending to V . 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 reect this change. The implementation of the new tax credit causes the interest rate to V and the level of saving to V . Scenario 3: Initially, the government's budget is balanced; then the government significantly increases spending on national defense without changing taxes. This change in spending causes the gov- I u - I u a budget V , which V national saving. Shift the appropriate curve on the gran increasing change. This causes the interest rate to Y , V the level of investment spendingStep by Step Solution
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