Corporate Tax Cuts to Create100,000 Jobs

Jack Mintz and Duanjie Chen of the University of Calgary say that fully implementing the Conservativegovernment's corporate tax cut scheme will have"little" impact on budgetrevenue, and in themedium-term generate an estimated $30-billion in additional business investment and100,000 new jobs over aseven-year period.

Read the newsclip, then answer the following question.

Corporate tax cuts are likely to have a______ effect on aggregate supply and potential GDP than an equivalent scale increase in government spending on infrastructure and green energy projects because______.

A.

larger; the spending on infrastructure and green energy projects is not necessarily occurring in aprofit-driven environment whereas corporate tax cuts are occurring inprofit-driven firms

B.

larger; spending on infrastructure increases investment and has no effect on aggregate supply

C.

smaller; corporate tax cuts are discretionary fiscal policy and spending on infrastructure and green energy projects is automatic fiscal policy

D.

smaller; corporate tax cuts increase aggregate demand and have no effect on aggregate supply