After you have studied Economics in the News on pp. 340–341, answer the following questions.

a. On which factor incomes does the corporation income tax fall?

b. How does the corporation income tax influence investment and saving and the real interest rate? Draw a graph to illustrate your answer.

c. How does the corporation income tax rate influence potential GDP and the real GDP growth rate?

d. Explain why a cut in the rate of corporation income tax might speed economic growth. What does the evidence from Canada and Ireland imply about the strength of the effect?