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The Imposition of a Temporary Tax Credit for Just One

Question 30

Multiple Choice

The imposition of a temporary tax credit for just one year will


A) increase investment spending that year as firms take advantage of the tax credit
B) decrease investment spending the next year since firms will have accelerated investments originally planned for the next year
C) not significantly affect the level of capital stock in the long run
D) induce firms to undertake marginal investment projects that otherwise would not have been deemed profitable
E) all of the above

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