Asked by Alyssa Clark on May 09, 2024
Verified
A decrease in taxes on interest income would increase the interest rate.
Taxes On Interest Income
Taxes applied to income gained through interest from savings or investments.
Interest Rate
The amount charged by lenders to borrowers for the use of assets, expressed as a percentage of the principal, typically on an annual basis.
- Assess the influence of governmental tax strategies on savings habits.
Verified Answer
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Alisa DayanaMay 16, 2024
Final Answer :
False
Explanation :
A decrease in taxes on interest income would likely increase the demand for bonds (since after-tax returns on bonds would be higher), which would raise bond prices and lower interest rates, as bond prices and interest rates move inversely.
Learning Objectives
- Assess the influence of governmental tax strategies on savings habits.