What is the relationship between lower taxes, increased savings, and the supply of loanable funds?

• A. Lower taxes increase savings, but decrease the supply of loanable funds.
• B. Lower taxes have no impact on savings or the supply of loanable funds.
• C. Lower taxes decrease savings, which in turn decreases the supply of loanable funds.
• D. Lower taxes increase savings, which in turn increases the supply of loanable funds.

Answer: (D)