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Author Question: If business leaders expect the new Congress to lower the corporate profits tax, most likely this ... (Read 42 times)

RYAN BANYAN

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Question 1

If future benefits are underestimated by a firm


◦ the firm will invest too much in capital.
◦ the firm will use only retained earnings to invest in capital.
◦ the firm will invest too little in capital.
◦ the firm will only sell bonds to invest in capital.

Question 2

If business leaders expect the new Congress to lower the corporate profits tax, most likely this will cause business firms, 
ceteris paribus, to


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


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Marked as best answer by RYAN BANYAN on Apr 19, 2019

Dinolord

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