Scenarlo 1: Suppose savers either buy bonds or make deposits in savings accounts at depository Institutions. Initially, the interest income camed 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% Market for Loanable Funds -O 5 TEREST RATE 2 LOANABLE FUNDS the quantity in the This change causes avers to supply oloanable fonds demanded, there quantity of lonnable funds demanded loanable funds. Because the quantity of lorable Funds supplied is now pressure on terest rates. This change in interest rates causes an) Scenario 2: An investment tax credit effectively lower the taxes paid by firms that purchase new equipment or build a new manufacturing facility Suppose the government implements a new investment tax credit. HW2_Ch2 Scenario 2: An Investment tax credit effectively lowers the taxes paid by firms that purchase new equipment or build a new manufacturing facility. Suppose the government implements a new investment tax credit. Market for Loanable Funds DA INTEREST RATE LOANABLE FUNDS Sorabi funds. Because the quantity of loanbefunds demanded is now pressure on interest rates. This change in interest rates causes The implementation of a new tax credit causes borrowers to demand the quantity of lountable funds supplied, there is a) in the quantity of loanable Funds supplied Grade It Now Save & Continue