Upgrade to access all content for this subject
Suppose the government suddenly raised taxes but consumers did not change spending amounts and instead dipped into savings.
Then, ceteris paribus, which of the following outcomes is most likely?
Real interest rates fall, quantity of loans increase.
Real interest rates rise, quantity of loans increase.
Real interest rates rise, quantity of loans decrease.
Real interest rates fall; quantity of loans decrease.
Stasis: No shift of either curve; just a quantity change.