If Congress passed a law last year that will increase corporate taxes this year, holding other things constant, stock prices will _____ this year.

Question

Quizplus · Accepted Answer

An increase in corporate taxes will lead to a decrease in corporate profits, which will result in a decrease in stock prices as investors will perceive the company as less valuable. Therefore, stock prices will decrease this year if Congress passed a law to increase corporate taxes.

If Congress Passed a Law Last Year That Will Increase