What is the effect in the current year and in following year

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Suppose that an explicitly temporary tax credit is enacted. The tax credit is at the rate of 10 percent and lasts only one year.

a. What is the effect of this tax measure on investment in the long run (say, after four or five years)?

b. What is the effect in the current year and in the following year?

c. How would your answers in ( a ) and ( b ) differ if the tax credit were permanent?

Reference no: EM131136384

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