If the government gives firms a temporary investment tax credit:

Question

Quizplus · Accepted Answer

A temporary investment tax credit would provide an incentive for firms to invest now rather than delaying investment until the future, thereby increasing current investment (choice A). An increase in investment would stimulate economic activity in the short-run, leading to an increase in GDP (choice B). Additionally, the increase in investment could lead to an increase in long-term economic growth due to an increase in productive capacity (choice C). Therefore, all of these answers are correct.

If the Government Gives Firms a Temporary Investment Tax Credit