Question

Policies and Economic Growth

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Explain which of the following policies you believe are likely to increase the rate of economic growth in the United States.

a. Congress passes an investment tax credit, which reduces a firms taxes if it installs new machinery and equipment.

b. Congress passes a law that allows taxpayers to reduce their income taxes by the amount of states sales taxes they pay.

c. Congress provides more funds for low-interest loans to college students.

Answer 1

All the three policies mentioned here are going to increase the rate of economic growth in the economy.

a) Investment tax credit will make the investment cheaper and firms will be encouraged to invest more this will increase the demand in the economy and boost economic growth.

b) Reduced tax amount will increase the disposable income of people and they will demand more. Thereby increasing the economic growth.

c) Cheaper loans will help students to save more money with them and hey can buy more goods they need Increasing the demand and economic growth in the country.