If Business Leaders Expect the New Congress to Lower the Corporate

question 163

Multiple Choice

If business leaders expect the new Congress to lower the corporate profits tax, most likely this will cause business firms, ceteris paribus, to

• A) plan to decrease investment in the future to compensate for the lower tax rate.
• B) decrease investment because they would expect lower benefits from investment.
• C) not change their investment plans because lower corporate profit taxes will not change the demand for their product.
• D) increase investment because the lower corporate profits tax will increase the return on any investment.

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Definitions:

Logic of Statements

The study and application of the principles of valid inference and correct reasoning, especially as it applies to statements.

Valid Inferences

Reasonable conclusions or judgments drawn from evidence and reasoning rather than explicit statements.

Validity

The extent to which a concept, conclusion, or measurement is well-founded and likely corresponds accurately to the real world.

Conjunction

The combination of two or more events, conditions, or propositions, typically expressed in logic and mathematics.