Choose all true statements on the saving, investment and loanable funds market in a closed economy. (choose 2) a. If the government opens up a budget deficit by cutting labor income tax, and workers save full proceeds of the tax cut, interest rate and investment do not change. O b. If the government opens up a budget deficit by cutting labor income tax, and workers spend additional income saved from the tax cut, national saving falls and interest rate rises. O C. An increase in corporate income tax will lead to a higher equilibrium interest rate. d. Tax incentives for saving will lead to higher interest rates and thus lower investments.

Choose all true statements on the saving, investment and loanable funds market in a closed economy. (choose 2) a. If the government opens up a budget deficit by cutting labor income tax, and workers save full proceeds of the tax cut, interest rate and investment do not change. O b. If the government opens up a budget deficit by cutting labor income tax, and workers spend additional income saved from the tax cut, national saving falls and interest rate rises. O C. An increase in corporate income tax will lead to a higher equilibrium interest rate. d. Tax incentives for saving will lead to higher interest rates and thus lower investments.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: Savings,investment And The Financial System

Section: Chapter Questions

Problem 9PA

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