What would happen to the planned investment function if business taxes were decreased?
A) It would shift to the left.
B) It would shift to the right.
C) There would be a upward movement along the function.
D) There would be no change.

Question

Quizplus · Accepted Answer

If business taxes were decreased, the after-tax cost of investment would decrease. This would increase the expected rate of return on investment, leading to a higher level of planned investment. As a result, the planned investment function would shift to the right.

What Would Happen to the Planned Investment Function If Business