A decrease in corporate taxes that producers must pay will have which of the following effects?

A decrease in corporate taxes that producers must pay increases the after-tax profits for businesses, which in turn can incentivize them to invest more in production capabilities, inventory, and hiring. This increased investment typically leads to a rise in short-run aggregate supply, as companies can produce more goods at lower costs when their tax burden is reduced.

With lower taxes, firms may also have more funds available to innovate and improve efficiency, further boosting their production potential. Consequently, the aggregate supply curve shifts to the right, indicating an increase in the total output in the economy at every price level. This reflects a favorable impact on the economy as firms expand their operations, ultimately supporting economic growth.