O Wha s the likely effect of the tax cut in 2018 on the earn

O Wha s the likely effect of the tax cut in 2018 on the earnings of the companies that produce tradable products and compete with foreign producers (e.g. companies producing electronic equipment and various types of machinery)? [10] he stronger dollar (the excha

Solution

7.

Tax cut in 2018, will cause relatively lesser tax liability to the companies. So, it will increase the after tax earnings of the companies. Besides, the tax cut, will create a price advantage for these companies and they will become more competitive with the foreign producers. It will increase the sales and earnings of these companies, will further increase.