ECO 1102 Lecture Notes - Lecture 22: Risk-Free Interest Rate, Tax Bracket, Credit Risk

• School: University of Ottawa
• Department: Economics
• Course: ECO 1102
• Professor: Gordon Lenjosek

Document Summary

Real after-tax return is your increase in purchasing power. View more information on slide 45 along with the formula. You pay tax when you pull money out of the rsp after you retire so you have a lower income tax bracket. Reducing income tax on saving can stimulate the incentive toward saving and improving standards of living. More detailed example on slide 46 regarding the rate of growth (going to be on the midterm) Saving incentives: this increases the equilibrium for funds. Investment incentive: regulations such as those that are required for starting a business. They can have an impact on the processing time. Remember that the supply curve is private and public * Government budget deficits: borrowing with a certain amount of savings out there, takes money away from private businesses, less for investment purposes for the private businesses. We are adding behavioural to each of these things. It is important for long-run economic growth and living standards.