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Graphically illustrate (draw) and explain the effect of a sustained increase in savings on the growth of output
(Provide explanations)
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- Explain the effect of a sustained increase in savings on the growth of output in detail please. Also provide a simple graph to illustrate thisGraphically illustrate (draw) and explain the effect of a sustained increase in savings on the growth of outputThis question addresses the impact of saving on an economy by examining what happens if tax laws change to induce saving and how changes in tax laws can discourage saving. The following graph shows the market for loanable funds. Show the impact of a change in the tax law that successfully encourages saving by shifting either the demand curve (D), the supply curve (S), or both. A tax law change that successfully encourages saving will (increase/decrease) interest rates, which leads to (less/more) investment and economic growth. To better understand how changes in tax laws can affect saving, suppose that Madison, a rising third-year in college, plans to save $550 from her summer job in order to buy textbooks for the upcoming fall semester. Madison's parents are so impressed with her plans that they offer to pay her an additional 30% interest per month on the money she saves, which means that Madison is now earning a large rate of return on her saving. By the end of the…
- Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the interest income earned on bonds or deposits is taxed at a rate of 20%. Now suppose there is a decrease in the tax rate on interest income, from 20% to 15%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to and the level of investment spending toa borrower cannot become a saver if the rate of interest decreases, but might become a saver if the rate of interest increases. is this true or false? carefully explain your answer (which must prove or disprove each part of the statement) using any appropriate diagramsGraphically illustrate the aggregate consumption and saving functions. Explain these functions with at least 200 words. You may give examples.
- True/False and Explain An increase in savings implies a decrease in consumption and therefore a decrease in GDP.Explain what happens to consumption, investment, and the interest rate when the government increases taxes. Show graphically the effect of increased taxes when saving is not dependent on interest rate.Consider an economy described by the following equations:Y=C + I +GY=7,000G=4000T=2,000C=150+0.75(Y-T)I=1,000-50rb. Calculate the equilibrium interest rate. c. Now suppose the G rises by 1,000. Compute private saving, public saving, andnational saving.d. Calculate the new equilibrium interest rate.For these 3 questions please only show the graphical response.
- In each part that follows, use the economic data given to find national saving, private saving, public saving, and the national saving rate. a. Household saving = 200 Business saving = 400 Government purchases of goods and services = 120 Government transfers and interest payments = 100 Tax collections = 175 GDP = 2,300 Instructions: Enter your response for the national saving rate rounded to one decimal place. If you are entering any negative numbers, be sure to include a () In front of those numbers. National saving Private saving Public saving National saving rate GOO b. GDP = 6,050 Tax collections = 1,225 Government transfers and interest payments - 400 Consumption expenditures 4,500 Government budget surplus 100 Instructions: Enter your response for the national saving rate rounded to one decimal place, If you are entering any negative numbers, be sure to include a () in front of those numbers. National saving Private saving Public savingNational saving rate 100 c Consumption…Which of the following situations represents investment? Saving? ExplainYour family takes out a mortgage and buys a new house. You use your paycheque to buy stock in Sagicor Financial Services.Graphically illustrate the aggregate consumption and saving functions. Explain
