Assume That Both the Corporate and Noncorporate Sectors Are in Long-Run

question 148

Multiple Choice

Assume that both the corporate and noncorporate sectors are in long-run equilibrium before the imposition of a corporate profits tax. In the short run, the imposition of a corporate profits tax will

• A) decrease profits in both the corporate and noncorporate sectors.
• B) not change profits in either the corporate or the noncorporate sector.
• C) not change profits in the noncorporate sector, but decrease profits in the corporate sector.
• D) not change profits in the corporate sector, but increase profits in the noncorporate sector.

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