If the federal government lowers taxes on investment by businesses:
A)aggregate expenditure will fall, leading to a decrease in equilibrium GDP.
B)consumption and investment will increase, leading to a rise in aggregate expenditure and an increase in equilibrium GDP.
C)imports by consumers will rise and this will cause net exports to fall.
D)aggregate expenditure will rise, leading to an increase in equilibrium GDP.

Question

Quizplus · Accepted Answer

Lowering taxes on investment by businesses typically encourages more investment spending, which increases aggregate expenditure and leads to a rise in equilibrium GDP.

If the Federal Government Lowers Taxes on Investment by Businesses