Which of the following policy changes would lead to a decrease in the real interest rate and an increase in investment and saving?
A)a larger investment tax credit
B)an expansion of eligibility for Individual Retirement Accounts
C)an increase in income-tax rates,with no change in the government budget deficit or surplus
D)an increase in government purchases,with no change in taxes

Question

Quizplus · Accepted Answer

Expanding eligibility for Individual Retirement Accounts encourages more saving by providing tax advantages, which can increase the supply of loanable funds, leading to a decrease in the real interest rate and an increase in investment.

Which of the Following Policy Changes Would Lead to a Decrease