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[rs7k]

I have this assignment due tomorrow for my business course, and I'm quite sure the prof won't take it late.

It's first-year, and I don't think it's quite university-level (since I'm in college). Anyways, the teacher handed us two articles from the National Post (Canadian newspaper) about the recent $4.6B scrapping of corporate tax cuts by the Liberals to please the NDP. I'm well aware of the situation as politics is one of my main interests.

However, the teacher has asked us to relate the article to topics that we've covered, namely aggregate demand and aggregate supply. I've already written most of the assignment, but I'm missing about half a page on this last bit, and quite frankly I have no clue how to explain and/or relate those two topics together.

So, I might be missing something really obvious here. I'd be very grateful if anybody could point it out. So how do aggregate supply and demand relate to corporate tax cuts, and vice-versa?

 

[Mugen]

I HATED Economics. I just HATE IT.

 

[Pochacco]

Wow.
I don't remember a THING I learned in all the economics classes that I took the last few years.

Perhaps government taxes could be seen as a factor that just intrudes on market forces (supply & demand).

I don't know! This thread makes me feel dumb

 

[NetMapel]

A tax cut means more money for companies to spend on other things, therefore the supply curve would shift right (increase). As supply curve increases, equalibrium price drops and quanitity increases as well. Draw the supply-demand curve to illustrate that point I hope I get this right.

 

[Pochacco]

I think NetMapel may be onto something.

If the tax cuts were for EVERYBODY, it would mean more disposable income, hence greater consumption, therefore greater demand. However, since the tax cuts are corporate, then I guess that means....supply increases?

\still feels dumb

 

[The Fronde]

I hate to just echo what's already been said, but I also think NetMapel's correct. Lower taxes allow businesses to invest more in capital goods and such, increasing supply. That means lower prices and a greater quantity -- and higher national income too I believe.

Google it while you're at it.

 

[goodcow]

I hate to just echo what's already been said, but I also think NetMapel's correct. Lower taxes allow businesses to invest more in capital goods and such, increasing supply. That means lower prices and a greater quantity -- and higher national income too I believe.

Google it while you're at it.

Hasn't outsourcing changed all this? Now companies just sit on huge wads of cash in Duck Tales vaults, and CEO pay just keeps skyrocketing lowering national income.

 

[rs7k]

Thanks a lot NetMapel!1

 

[SickBoy]

So how does this compare with the real world?