Use the following to answer questions:
Figure: Policy Alternatives 
-(Figure: Policy Alternatives) Refer to Figure: Policy Alternatives. If the economy is in equilibrium at Y1 in panel (a) and the government does not intervene, the result will likely be:
Definitions:
Assumed Investment Rate
The projected rate of return assumed for a hypothetical investment over a specific period.
Annuity Cost
The initial investment or premium required to purchase an annuity, which in return provides periodic payments for a specified period or for life.
Pretax Return
The financial return on an investment before any taxes are deducted.
Taxable Investor
An individual or entity that is subject to taxes on investment income and capital gains, affecting investment choices and strategies to minimize tax liabilities.
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