5. Problems and Applications Q2 Suppose that Congress isconsidering an investment tax credit, which subsidizes...

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Economics

5. Problems and Applications Q2 Suppose that Congress isconsidering an investment tax credit, which subsidizes domesticinvestment. Complete the following table by indicating how thispolicy affects national saving, domestic investment, net capitaloutflow, the real interest rate, the exchange rate, and the tradebalance. As a result of the investment tax credit, domestic goodswill become expensive for foreigners to purchase.

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