Explain the effect of increase in taxes on business profits

Reference no: EM131136090

Firms care about their after-tax rate of return on investment projects. In the market for loanable funds, draw a graph and explain the effect of an increase in taxes on business profits. (For simplicity, assume no change in the federal budget deficit or budget surplus.) What happens to the equilibrium real interest rate and the quantity of loanable funds? What will be the effect on the level of investment by firms and the economy's capital stock in the future?

Reference no: EM131136090

Questions Cloud

Determine the P value and use finding to state : Given the linear correlation coefficient r and the sample size n, determine the P-value and use your finding to state whether or not the given r represents a significant linear correlation. r = 0.568, n = 30

Types of information technology for organized labor : What are the implications of new types of information technology for organized labor? Should labor unions embrace the use of new information technology?

Total annual cost of ordering optimal order size : Rocky mountain tire center sells 12,000 go cart tires per year. The ordering cost for each order is $35, and the holding cost is 40% of the purchase price of the tires per year. How manny tires should rocky Mountain order each times it places an orde..

Why diversity is important to an organization success : Investigate two to three (2-3) reasons why diversity is important to an organization's success. Speculate on the major potential ramifications to an organization if said organization does not practice diversity management. Give at least two (2) ex..

Explain the effect of increase in taxes on business profits : What will be the effect on the level of investment by firms and the economy's capital stock in the future?

What are the requisites of democracy : During 2011, strong popular movements demanding democracy emerged across the Middle East and North Africa known as the "Arab Spring." How likely is it that these countries will be able to establish democracies? What are the requisites of democracy

What is the reason for this difference in elasticity : What is the reason for this difference in elasticity?- price elasticity of demand for necessities, such as food, are higher in developing countries and lower in developed countries.

Analyze the main advantages of using data analytics : Analyze the main advantages and disadvantages of using data analytics within the industry or company that you have chosen.

Describe the president role in making foreign policy : Describe the president's role in making foreign policy and who or what assists him with this. How does Congress balance the presidential role

User Account

All Pages