Business
Engineering
Math
Science
Social Science
Suppose that Congress is considering an investment tax credit, which subsidizes domestic investment. a. How does this policy affect national saving, domestic investment, net capital outflow, the interest rate, the exchange rate, and the trade balance? b. Representatives of several large exporters oppose the policy. Why might that be the case?
Principles of Macroeconomics (Mind...
Principles of Macroeconomics (Mind...
Suppose that Congress is considering an investment tax credit, which subsidizes domestic investment.
a. How does this policy affect national saving, domestic investment, net capital outflow, the interest rate, the exchange rate, and the trade balance?
b. Representatives of several large exporters oppose the policy. Why might that be the case?
Sub part (a):
Explanation of Solution
The tax is a unilateral payment made by the people to the government of the economy. When the government collects the taxes, the revenue of the government is collected with which the government can make the public expenditures.
When the government introduces the tax credit on the investments, this means that those who have investments in the economy will have some tax credits available, which subsidizes the domestic investments of the economy. This passing of law will make the desire of the capitalists to invest more to increase. As a result, more borrowings take place in the economy, which increases the demand for the lonable funds in the lonable fund market. This situation can be illustrated as follows:
The increased demand for the lonable funds in the lonable fund market would lead to the increase in the real interest rate in the economy...
Sub part (b):
Chapter 19 Solutions
Additional Business Textbook Solutions
Principles of Microeconomics (MindTap Course List)
Principles of Economics (MindTap Course List)
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Probability and Statistics for Engineering and the Sciences
STATISTICS F/BUSINESS+ECONOMICS-TEXT
Brief Principles of Macroeconomics (MindTap Course List)
Foundations of Business (MindTap Course List)
Corporate Financial Accounting
Fundamentals of Financial Management (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Financial & Managerial Accounting
Cornerstones of Financial Accounting
Accounting Information Systems
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
Essentials of Business Communication (MindTap Course List)
College Accounting, Chapters 1-27
Financial Accounting
Financial And Managerial Accounting
Management, Loose-Leaf Version
Essentials of Economics (MindTap Course List)
Contemporary Marketing
MKTG 12:STUDENT ED.-TEXT
Financial Accounting
Accounting Information Systems
Intermediate Accounting: Reporting And Analysis
Managerial Accounting: The Cornerstone of Business Decision-Making
College Accounting (Book Only): A Career Approach
Financial & Managerial Accounting
Exploring Economics
Statistics for Business & Economics, Revised (MindTap Course List)
Accounting (Text Only)
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
College Accounting (Book Only): A Career Approach
Fundamentals of Financial Management (MindTap Course List)
Pkg Acc Infor Systems MS VISIO CD
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Microeconomics
Economics (MindTap Course List)
Economics For Today
Macroeconomics
Cornerstones of Cost Management (Cornerstones Series)
Purchasing and Supply Chain Management
Survey of Accounting (Accounting I)
Practical Management Science
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Corporate Financial Accounting
Macroeconomics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
Microeconomics: Private and Public Choice (MindTap Course List)
MACROECONOMICS FOR TODAY
Micro Economics For Today
Understanding Management (MindTap Course List)
