If the government allows businesses to accelerate (increase)depreciation,then

Name: If the government allows businesses to accelerate (increase)depreciation,then
Brand: Quizplus
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Quizplus · Accepted Answer

Allowing businesses to accelerate depreciation reduces their taxable income, which in turn reduces their tax liability. This reduces the user cost of capital as the tax savings increase the after-tax return on investment. With a lower user cost of capital, firms are incentivized to invest more, leading to an increase in V*.

If the Government Allows Businesses to Accelerate (Increase)depreciation,then