nttpshewCOTNetheddat nec mhe Exam Il Topics 810 A decrease i

nttps.//hewCOTNetheddat nec ·mhe Exam Il (Topics 8-10) A decrease in business taxes will tend to 12nm Multiple Choice Increase aggregate demand but not change aggregate supply eBook Increase aggregate supply but not change aggregate demand Increase aggregate supply decrease aggregate demand

Solution

Ans is C

Decrease in business taxes leads to increase the return from investment amd thus this will increase the investment and the aggregate supply will increase. Becauae increase in investment leads to increase in capital formaltion and increase in capital which is most important for production and supply curve.