Discussion 10: Impact of Lower Corporate Tax Rate

Discussion 10: Impact of Lower Corporate Tax Rate

Discussion Topic:

Suppose Congress votes to decrease corporate income tax rates. Use the AD/AS model to analyze the likely impact of the tax cuts on the macroeconomy. Show graphically and explain your reasoning. What exactly causes AD and/or AS to shift? What happens to GDP and the aggregate price level? Why?

Submission Requirements:
The discussion grade will be based on how thorough and detailed your posts are.
Your initial post must be published first, should be substantial, and answer the question(s) in detail.
You must post at least TWO replies to other students’ posts.
Your replies must be a minimum of 5 sentences long and, again, must be meaningful and detailed.
Proofread the content of your posts before making them public. Proper grammar and sentence structure are expected.

Solution Preview

Discussion

Impact of Lower Corporate Tax Rate

In this scenario, I assumed a situation where Congress votes to reduce the corporate taxation rate in the country. Such a move would mean that corporations would be required to pay income taxes on their revenues at a lower percentage than the current tax rate. Using the AD/AS model, one can come up with some of the impacts that lower 

(330 words)