In: Economics
2. Problems and Applications Q2
Suppose that Congress is considering an investment tax credit, which subsidizes domestic investment. Which of the following accurately describes the effect of an investment tax credit?
Check all that apply.
Real interest rate increases
Net capital outflow decreases
Exchange rate decreases
Trade balance increases
National saving increases
Domestic investment decreases
As a result of the investment tax credit, domestic goods will become (more or less) expensive for foreigners to purchase.
A tax credit is an amount of money that taxpayers can subtract from taxes owed to their government. In such situation following will be the effect: