A Decrease in the Effective Tax Rate on Capital Would

question 74

Multiple Choice

A decrease in the effective tax rate on capital would cause the IS curve to

• A)shift up and to the right.
• B)shift down and to the left.
• C)remain unchanged.
• D)remain unchanged if taxes are fully deductible from income; otherwise, shift up and to the right.

---

Definitions:

Industrial Regulation

The imposition of rules by the government on firms and industries to promote competition, control monopoly power, protect consumers, and regulate prices and service quality.

Production Costs

Expenses incurred in the process of manufacturing or producing goods, including materials, labor, and overhead costs.

Industrial Regulation

Involves government rules and policies aimed at controlling the practices, standards, and market entry of firms in specific industries to prevent unfair practices and promote competition.