Which will a cut in the corporate income tax rate

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Problem 1: Consider corporations that have debts, but not especially heavy debts. Under which condition(s) will a cut in the corporate income tax rate from 35% to 21% be most likely to induce them to raise their investment spending during the first 3 years after the reform?

a) Demand for the corporations' output is high, but the corporations have difficulty borrowing.
b) Demand for the corporations' output is high and the corporations have no difficulty borrowing.
c) Demand for the corporations' output is low and the corporations have difficulty borrowing.
d) Demand for the corporations' output is low, but the corporations have no difficulty borrowing.

Reference no: EM132713108

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