Policies That Deter Investment Such as an Increase in the Corporate

Multiple Choice

Policies that deter investment such as an increase in the corporate profit tax rate,

A) will increase aggregate demand due to increased tax revenue, and eventually shift the long-run aggregate supply (LRAS) curve to the right of where it would have been.
B) will reduce aggregate demand, and eventually shift the LRAS curve to the left of where it would have been.
C) will initially increase aggregate demand due to increased tax revenue, but eventually shift the long-run aggregate supply (LRAS) curve to the left of where it would have been.
D) will initially reduce aggregate demand, but eventually shift the LRAS curve to the right of where it would have been as firms raise prices to compensate for the tax increase.