The government wants to bring about an increase in investment expenditures and is considering two tax policies that policymakers think could bring this about. Under the first tax policy, firms would receive a subsidy in the current period of t per unit of current output produced. Policymakers reason that firms will use this subsidy for investment. The second policy under consideration is an investment tax credit, by which firms would receive a subsidy of s per unit of investment in the current period. Determine which tax policy would be more effective in accomplishing the government's goal of increasing current investment expenditures, and carefully explain your results.

(CHOOSE WHICH IS THE CORRECT OPTION IN THE BRACKETS IN THE BELOW PARAGRAPH)

Both the output subsidy and the investment subsidy would result in (A DECREASE IN, AN INCREASE IN, OR NO CHANGE IN) taxes to satisfy the government budget constraint. This would (INCREASE, HAVE NO EFFECT ON, OR REDUCE) consumer wealth and result in the labor supply (SHIFTING TO THE RIGHT, SHIFTING TO THE LEFT, OR REMAINING UNCHANGED) and the output supply (SHIFTING TO THE RIGHT, SHIFTING TO THE LEFT, OR REMAINING UNCHANGED) As a result, output would (INCREASE, DECREASE, OR REMAIN UNCHANGED) and the real interest rate would (INCREASE, DECREASE, OR REMAIN UNCHANGED) There would be (a decrease in both consumption spending and investment spending, a decrease in consumption spending and an increase in investment spending, an increase in consumption spending and a decrease in investment spending, OR an increase in both consumption spending and investment spending).