Question

A rise in the tax rate on businesses leads to a decline in the desired level...

A rise in the tax rate on businesses leads to a decline in the desired level of capital and a decrease in investment.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Yes, it true that the increase in the tax rates on the business leads to a decline in the desired level of capital and a decrease in investment.

Let's assume a situation where the tax rates are very high. In such a scenario, business has to earn more profit so that they are left with some amount of money after paying taxes. If their profit is less they will end up losing all their money in taxes and other expenses and they may not start their business as well and wait for the moment where the expected profit increase or taxes fall.

In case of high taxes, only those business start functioning where the businessman can make sufficient profit if taxes are less. When the taxes are low it will attract more business and investment even when the expected profits are less.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Answer if each statement is true, false, or uncertain. Support your answer with a few lines....
Answer if each statement is true, false, or uncertain. Support your answer with a few lines. 1. When the real wage is below the equilibrium price in the labor market we have an excess demand of labor and the real wage should increase. 2. With perfect capital mobility, the domestic real interest rate must be the same as the world real interest rate. 3. In the quantity theory of money, real output is an endogenous variable. 4. The Keynesian consumption...
In the short run, a rise in the price level brings a ________ money wage rate...
In the short run, a rise in the price level brings a ________ money wage rate that ________ profits which leads to ________ production.
Increase in money supply leads to a …………………in the interest rate for a given level of...
Increase in money supply leads to a …………………in the interest rate for a given level of output, real money supply ……………….. # randomize A. Increases, decrease B. Decrease, increase C. Increase, increase D. Decrease, decrease
1. A higher savings rate that leads to an increase in the capital stock leads to...
1. A higher savings rate that leads to an increase in the capital stock leads to increases in labor productivity. is associated with a decrease in the rate of growth of the population. immediately decreases investment. leads to higher interest rates. 2. Factors that influence labor productivity include ________. physical capital, human capital, and technology the inflation rate, the real wage rate, and the exchange rate physical capital, the real wage rate, and technology the labor demand curve 3. The...
Which of the following best describes the multiplier process? A.  A decrease in exports leads to a...
Which of the following best describes the multiplier process? A.  A decrease in exports leads to a reduction in taxes, which causes government spending to fall. B.  An increase in interest rates leads firms to cut their investment spending. That causes expectations of future profits to worsen, which leads to even more cuts in investment spending. C.  A decline in net exports leads firms to reduce their investment spending, which raises interest rates and causes further reductions in investment spending. D.  A decrease in...
Which of the following best describes the multiplier process? A. A decrease in investment spending leads...
Which of the following best describes the multiplier process? A. A decrease in investment spending leads to a decrease in disposable income, which causes consumers to reduce their spending. B. A decline in net exports leads firms to reduce their investment spending, which raises interest rates and causes further reductions in investment spending. C. A decrease in exports leads to a reduction in taxes, which causes government spending to fall. D. An increase in interest rates leads firms to cut...
Other things held constant, following an decrease in wealth, the real interest rate _____ and desired...
Other things held constant, following an decrease in wealth, the real interest rate _____ and desired national savings _______ rises; declines rises; increases falls; declines falls; increases remains the same; remains the same Other things held constant, following a decrease in the effective tax rate on capital, the real interest rate _____ and desired national savings _______ rises; declines rises; increases falls; declines falls; increases remains the same; remains the same
QUESTION 52 A decrease in U.S. interest rates leads to a. a depreciation of the dollar...
QUESTION 52 A decrease in U.S. interest rates leads to a. a depreciation of the dollar that leads to smaller net exports. b. a depreciation of the dollar that leads to greater net exports. c. an appreciation of the dollar that leads to greater net exports. d. an appreciation of the dollar that leads to smaller net exports. 1 points    QUESTION 53 As the price level falls, a. the exchange rate rises, so net exports fall. b. the exchange...
If real GDP is above its potential, then according to the classical theory workers and businesses...
If real GDP is above its potential, then according to the classical theory workers and businesses will agree to lower wages. In response to the lower wages firms will produce less at any given price level. workers and businesses will agree to lower wages. In response to the lower wages firms will produce more at any given price level. workers and businesses will agree to higher wages. In response to the higher wages firms will produce less at any given...
The rise in the value of one currency in relation to another is : Depreciation of...
The rise in the value of one currency in relation to another is : Depreciation of the currency. An appreciation of the currency. A debasement of the currency. A weakening of the currency. Cyclical unemployment refers to unemployment which occurs Because of the seasonal nature of some industries. As a result of the long term decline of the industry. At particular times of the year. As a result of a temporary drop in aggregate demand resulting in a recession. Which...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT