The Adoption of an Investment Tax Credit in a Small

question 94

Multiple Choice

The adoption of an investment tax credit in a small open economy is likely to lead to:

• A)no change in either domestic investment or domestic saving.
• B)an increase in both domestic investment and domestic saving.
• C)an increase in domestic saving but no change in domestic investment.
• D)an increase in domestic investment but no change in domestic saving.

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Definitions:

Labor

Workforce or employment involved in the creation of goods and services within an economy.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good that consumers are willing to purchase at different prices.

Labor Supply Curve

Represents the relationship between the quantity of labor supplied and the wage rate in a given period.

Marginal Cost

An adjustment in the total expenses resulting from producing one additional unit.