Answer to Question #208892 in Finance for Syed Eassa

Question #208892

Consider that savers are taxed on their nominal income, and explain what happens to the supply and demand curves in the loan market as inflation rises? (Using graphs).


1
Expert's answer
2021-06-21T12:20:51-0400

As inflation rises, the real income falls, so the supply of loanable funds will decrease, so the interest rate will increase, and amount of loanable funds available will decrease.


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