If the Federal Government Lowers Taxes on Investment by Businesses

Multiple Choice

If the federal government lowers taxes on investment by businesses:

A) aggregate expenditure will fall, leading to a decrease in equilibrium GDP.
B) consumption and investment will increase, leading to a rise in aggregate expenditure and an increase in equilibrium GDP.
C) imports by consumers will rise and this will cause net exports to fall.
D) aggregate expenditure will rise, leading to an increase in equilibrium GDP.