Using the Aggregate Demand-Aggregate Supply (Short-Run) Model, Explain How a Reduction

question 2

Essay

Using the aggregate demand-aggregate supply (short-run) model, explain how a reduction in business taxes would affect the economy.

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Definitions:

Retained Earnings

The portion of net income left over for the business after it has paid out dividends to its shareholders.

Carrying Amount

The book value of assets and liabilities as reported in the financial statements, factoring in depreciation, amortization, and impairment.

Voting Shares

Shares that give the shareholder the right to vote on matters of corporate policy and the selection of board members.

Investment Account

A financial account held at a bank or brokerage that is used to hold securities, stocks, bonds, and other investments.