Question

Suppose the market for loanable funds is in equilibrium. What would happen in the market for loanable funds, other things the same, if the Congress and President increased the maximum contribution limits to 401(k) and 403(b) tax-deferred retirement accounts?

Answer 1

answered

Explanation:

If the Congress and President increased the maximum contribution limits to 401(k) and 403(b) tax-deferred retirement accounts, and the market of loanable funds is in equilibrium then the interest rate would increase and the quantity of loanable funds would also increase.