The economy of Marthaland decreased tax rates on businesses and households, which has changed the savings behavior of private households.
What happens to household savings and the real interest rate in the short run, and potential output in the long run?
1) Private households are saving more due to the decrease in tax rates.
2) Private households are saving less due to the decrease in tax rates.
3) Private households are not affected by the decrease in tax rates.
4) The impact on the savings behavior of private households cannot be determined based on the given information.