Question

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.

Answer 1

B) decrease investment because they would expect lower benefits from investment.

Step-by-step explanation:

The Democratic party refers to one of the major political parties in the United States of America. It was founded on the 8th of January, 1828 and has its headquarter in Washington DC, USA.

Also, a democratic nominee is an individual who is the flag bearer or official candidate of the democratic party by virtue of being selected by the delegates of the party. In order to become the winner of a democratic election, the nominee are expected to go around to campaign for votes from the electorates.

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 (all things being equal), to decrease investment because they would expect lower benefits from investment.

This ultimately implies that, business owners would be discouraged in investing in businesses due to an increase in the corporate tax.