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
A) plan to increase investment in the future to compensate for the higher tax rate.
B) decrease investment because they would expect lower benefits from investment.
C) not change their investment plans because higher corporate profit taxes will not change the demand for their product.
D) increase investment because the higher corporate profits tax will increase the return on any investment.
Correct Answer:
Verified
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