Holding Other Factors Constant, If Congress Passes a 5% Investment

question 138

Multiple Choice

Holding other factors constant, if Congress passes a 5% investment tax credit under which a firm receives $5 in tax refunds from the government for every $100 it spends on new capital equipment, then the real interest rate will ________ and the equilibrium quantity of national saving and investment will ________.

• A)increase; increase
• B)increase; decrease
• C)increase; not change
• D)decrease; increase

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Definitions:

Hearings

Formal meetings or proceedings typically conducted by a legislative, judicial, or administrative body to gather information or evidence.

Galvanize Opposition

To stimulate or incite a group to unite against a particular cause or issue, often resulting in intensified resistance or activism.

My Lai Massacre

A tragic incident during the Vietnam War in which American soldiers killed hundreds of unarmed Vietnamese civilians in a small village.

Draft

A system of compulsory recruitment for military service, often implemented during times of war to ensure an adequate supply of soldiers.