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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