What would happen in the market for loanable funds if the government were to increase the tax on interest income?   A) Real interest rates would rise. B) Real interest rates would be unaffected C) Real interest rates would fall. D) The effect on the real interest rate is uncertain.

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Chapter13: Inflation
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Problem 12SQ
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What would happen in the market for loanable funds if the government were to increase the tax on interest income?

 

A) Real interest rates would rise.

B) Real interest rates would be unaffected

C) Real interest rates would fall.

D) The effect on the real interest rate is uncertain.

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