Draw the diagram for the loanable funds model. Suppose the tax laws are altered to provide more incentives for private saving (assume that total tax revenue T does not change). What happens to the interest rate and investment?

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter21: Financial Markets, Saving, And Investment
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Draw the diagram for the loanable funds model. Suppose the tax laws are altered to provide
more incentives for private saving (assume that total tax revenue T does not change). What
happens to the interest rate and investment?

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