QUESTION 5: a) The AG/ has complained about recent high taxes on investment. Suppose that a fire taxed at rater on profits such that the marginal benefit of a one-dollar increas investment is MPK (1 - t). But the firm is also entitled to various tax benc including tax credits on the investment, an accelerated depreciation schedule, and deductibility of interest costs. If the tax-saving opportunities are represented proportion, s. of the purchase price of the investment good, the cost of borrowing and the true rate of depreciation is d. As the Chief Economist, what will be your ac to the Trade and Industry Minister, seeking your competent advice on how to crea incentive for investment? Be clear with your derivations and intuition. suise b) As an advisor to the President of Ghana on economic issues, you are tasked to brie president on the need to accelerate output to increase investment. Discuss this usin accelerator model of investment. Be clear on your derivation and intuition. c) How does the accelerator theory of investment differ from the adjustment cost tl and the q-theory of investment? t'k(str) kld-+) QUESTION 5: a) The AG/ has complained about recent high taxes on investment. Suppose that a fire taxed at rater on profits such that the marginal benefit of a one-dollar increas investment is MPK (1 - t). But the firm is also entitled to various tax benc including tax credits on the investment, an accelerated depreciation schedule, and deductibility of interest costs. If the tax-saving opportunities are represented proportion, s. of the purchase price of the investment good, the cost of borrowing and the true rate of depreciation is d. As the Chief Economist, what will be your ac to the Trade and Industry Minister, seeking your competent advice on how to crea incentive for investment? Be clear with your derivations and intuition. suise b) As an advisor to the President of Ghana on economic issues, you are tasked to brie president on the need to accelerate output to increase investment. Discuss this usin accelerator model of investment. Be clear on your derivation and intuition. c) How does the accelerator theory of investment differ from the adjustment cost tl and the q-theory of investment? t'k(str) kld-+)