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:

Inventory Carrying Costs

Expenses associated with storing unsold goods, including warehousing, insurance, taxes, depreciation, and opportunity costs.

Complexity

The quality or state of having multiple parts interconnected or interwoven in a manner that makes a system or problem difficult to understand, predict, or navigate.

Globalization

The process of interaction and integration among people, companies, and governments worldwide, particularly evident in international trade and cultural exchange.