1.Suppose the law is changed so that innovation activities by firms are taxed at a much lower rate than other company expenses.

A)How would this affect firms' allocation between different types of investment? Explain.

B)How would this affect the interest rate? Explain.

C)What happens to the quantity of investment overall? Explain.

D)What happens to the short-run aggregates supply curve? Explain.

E)What happens to the long-run aggregate supply curve? Explain.

F)What happens to the value of the dollar? Explain.

G)What happens to the quantity of net exports demanded? Explain.

H)What happens to aggregate demand? Explain.