The Adoption of an Investment Tax Credit in a Small

question 85

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 in the small open economy.
• B) an increase in both domestic investment and domestic saving in the small open economy.
• C) an increase in domestic saving but no change in domestic investment in the small open economy.
• D) an increase in domestic investment but no change in domestic saving in the small open economy.

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Definitions:

Comparative Advantage

A theory in economics that suggests a country should specialize in producing and exporting goods in which it has a lower opportunity cost than its trading partners.

Absolute Advantage

The ability of an entity to produce a good or service more efficiently than its competitors when using the same amount of resources.

Skilled Human Resources

Individuals within the workforce who possess specialized training, knowledge, and experience in particular fields or disciplines.

Per Capita Incomes

The average income earned per person in a certain area in a specified year.