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Suppose the Government Institutes a New Investment Tax Credit

Question 81

Multiple Choice

Suppose the government institutes a new investment tax credit. This is likely to


A) shift the short-run aggregate supply curve to the right by an amount equal to the amount of tax credit times the spending multiplier.
B) shift the aggregate demand curve to the right by an amount equal to the amount of tax credit times the spending multiplier.
C) shift the short-run aggregate supply curve to the right by an amount equal to the initial change in investment times the spending multiplier.
D) shift the aggregate demand curve to the right by an amount equal to the initial change in investment times the spending multiplier.

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