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Suppose that an investment tax credit is stated to be temporary in nature, and the credit will be 10% on newly acquired capital (investment) equipment and will last just one year only.
a. What would you predict to be the effect of this tax credit in the long-run (say, 5 or 6 years)?
b. What would you predict to be the effect of this tax credit in the current year and the following year?
c. How would your answers to parts (a) and (b) differ if the tax credit were permanent?
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I want you to do online homework about The Influence of Monetary and Fiscal Policy on Aggregate Demand All the questions around 10
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