If the government imposes higher taxes on businesses, how would this affect the goods and factor markets?

Question

Answer

Both markets will be unaffected since taxes are irrelevant to economic activity.

Answer

Firms may cut back on hiring, reducing labour demand in the factor market, while the goods market may experience higher prices.

Answer

The goods market will experience lower demand as consumers will have more disposable income, and firms will expand hiring.

Answer

Firms will increase production to offset the tax burden, and the goods market will see lower prices.

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