When the U.S.government removes investment tax credits:
A)consumption spending falls.
B)the return on investment increases.
C)capacity utilization in the economy expands.
D)the cost of capital increases.
E)technological innovation advances more rapidly.

Question

Quizplus · Accepted Answer

Removing investment tax credits would increase the cost of capital, as companies wouldn't be able to deduct the credits from their taxes. This would make it more expensive for companies to invest in new projects or expansions.

When the U.S.government Removes Investment Tax Credits