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Author Question: When a Democrat is elected as president, business leaders expect that the corporate profits tax will ... (Read 41 times)

geodog55

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Question 1

Which of the following statements of the expected flow of future benefits is 
false?


◦ Firms must rely on forecasts of expected future benefits to make sensible investment decisions.
◦ Households, business firms, and governments all evaluate the expected flow of benefits when making investment decisions.
◦ If future benefits are overestimated by the firm, the firm will under invest in capital.
◦ If future benefits are underestimated by the firm, the firm will under invest in capital.

Question 2

When a Democrat is elected as president, business leaders expect that the corporate profits tax will be increased. Most likely, this will cause business firms, 
ceteris paribus, to


◦ plan to increase investment in the future to compensate for the higher tax rate.
◦ decrease investment because they would expect lower benefits from investment.
◦ not change their investment plans because higher corporate profit taxes will not change the demand for their product.
◦ increase investment because the higher corporate profits tax will increase the return on any investment.


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Marked as best answer by geodog55 on Apr 19, 2019

dudman123

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geodog55

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Reply 2 on: Apr 19, 2019
YES! Correct, THANKS for helping me on my review


amit

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Reply 3 on: Yesterday
:D TYSM

 

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