Answer to Question #305321 in Macroeconomics for Prit

Question

Briefly explain so each of the following policies will impact U.S. economic growth

a.

Congress passes and investment tax credit, which reduces a firm's taxes if it installs new

machinery and equipment.

D. Congress passes a law that allows taxpayers to reduce their federal income taxes by the

amount of state sales taxes they paid

C.

Congress provides more funds for low-interest loans to students

Answer 1

a) The economy of US will grow simply because the cost of operating a business entity will automatically be low. Similarly, reducing taxes for firms will encourage investors to come and invest more in the US leading the general growth of the economy.

b) This law will also lead to the growth of the economy. This will encourage more investors to invest in the economy because the government doesn't overtax them leading to the growth of the economy.

c)Providing loans to low-income students will mean empowering them to invest the money wisely. Similarly, due to the low tax levied by the government, many of the students will be encouraged to invest the money leading to the growth of the economy.