Author Question: Explain how a consumption tax could lead to a decrease in real interest ... (Read 55 times)

DyllonKazuo · **on:** Jun 30, 2018

Explain how a consumption tax could lead to a decrease in real interest rates.

Question 2

Assume that the supply curve for tomatoes is upward sloping. If the price per pound increases from 0.99 to 1.89, a greater quantity of tomatoes will be supplied to the market.
a. True
b. False
Indicate whether the statement is true or false

meryzewe · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

A tax on consumption would discourage individuals from making purchases. As a result, these individuals would be saving more. That would lead to an increase in the supply of loanable funds which would lead to a decrease in real interest rates.

Answer to Question 2

True