An Increase in the Corporate Profits Tax Is Likely to Cause

Multiple Choice

An increase in the corporate profits tax is likely to cause

A) the equilibrium interest rate to rise and the equilibrium price of bonds to fall.
B) the equilibrium interest rate to fall and the equilibrium price of bonds to rise.
C) the equilibrium interest rate and the equilibrium price of bonds both rise.
D) the equilibrium interest rate and the equilibrium price of bonds both fall.