The following graph depicts the market for loanable funds. An investment tax credit effectively lowers the tax
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Question:
The following graph depicts the market for loanable funds. An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose the government repeals a previously existing investment tax credit. Shift the appropriate curve(s) on the following graph to show the impact of this policy.
The repeal of the previously existing tax credit causes the real interest rate to (?) and the level of investment to (?).
Related Book For
Macroeconomics
ISBN: 978-1319120054
3rd Canadian edition
Authors: Paul Krugman, Robin Wells, Iris Au, Jack Parkinson
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