Question

How might recent increases in state and federal tax rates on incomes that businesses derive from capital investment have contributed to the investrment function's failure to rebound?

Short answer

As the result, It will depends upon the state that increases or decreases.

Step-by-step solution

Introduction

The symbollc connection between consumption and disposable income is expressed by the consumption function. There is a self-contained element that is not reliant on money, and a reliant half that is. During the recent recession, a greater percentage of increasing income was spent on physical items rather than services. This was the upshot of a decrease in net worth.

Conclusion

The counterpart of $MRS$ is the value of something like the spending multiplier. The $MPS$ would have increased if individuals spent more on physical items and less on services. Perhaps because overall consumption growth was lower and saving growth was higher. In this case, $MPS$ would have increased while the multiplier would have decreased.