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Discuss a savings or investment incentive that can be used to grow the economy Why might this policy not have its intended effect?
Wiki User
∙ 11y ago
One investment incentive to help grow the economy is for the government to lower the tax rate. This is done to encourage people to invest more. Businesses will more than likely use this extra money to invest in their company to help build sales which in turn helps add economic growth. People also would be able to save more money. This would allow banks to be able to give out more loans which would also help the economy.
Another incentive comes in the savings realm. For example retirement savings plans such as IRA's or 401K programs. This program allows people to put untaxed money into savings for retirement. If rates are high they might put more money into savings. This will give banks and investment firms more money to invest which will help the economy grow.
The problem I see it seems that people now days prefer to live out of their means and spend money rather than invest the money. So even if there is great rates it will not be of any effect because people are not saving they are spending. Then I also see there are people who would love to save and help their future while also helping the economy the problem is the cost of living now days is very expensive and these people just cannot afford to invest.
Wiki User
∙ 11y ago
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