Multiple Choice
Suppose your company is in equilibrium,with its capital stock at its desired level.A permanent increase in the tax rate on your firm's revenues now has what effect on your desired capital stock?
A) raises it,because the future marginal productivity of capital is higher
B) lowers it,because the future marginal productivity of capital is lower
C) raises it,because the after-tax user cost of capital is now lower
D) lowers it,because the after-tax user cost of capital is now higher
Correct Answer:
Verified
Correct Answer:
Verified
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