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Scenario 2: an investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. suppose the government implements a new investment tax credit.

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MrDay

Interest rates rise and savings rates rise

Any company that invests in new capital within the applicable period will effectively have its tax burden reduced by an investment tax credit.

Why Investment is necessary?

A successful strategy to invest your money and possibly increase your wealth is to open an investment account. Your money may see value growth that exceeds inflation if you make wise investment decisions. Compounding's effectiveness and the risk-return trade-off are the main causes of investing's higher growth potential.

Any company that invests in new capital within the applicable period will effectively have its tax burden reduced by an investment tax credit. This will motivate businesses to increase investment at all interest rates. The demand curve would be shifted to the right as the demand for loanable money rose.

Learn more about Investment here:

https://brainly.com/question/15105766

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