Policies That Deter Investment Such as an Increase in the Corporate

question 8

Multiple Choice

Policies that deter investment such as an increase in the corporate profit tax rate,

• A)will increase aggregate demand due to increased tax revenue, and eventually shift the long-run aggregate supply (LRAS)curve to the right.
• B)will reduce aggregate demand, and eventually shift the LRAS curve to the left.
• C)will initially increase aggregate demand due to increased tax revenue, but eventually shift the long-run aggregate supply (LRAS)curve to the left.
• D)will initially reduce aggregate demand, but eventually shift the LRAS curve to the right as firms raise prices to compensate for the tax increase.

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