A criticism of cuts in marginal tax rates is that they fail to:
A)decrease disinflation in the economy.
B)decrease demand-pull inflation in the economy.
C)increase aggregate supply more rapidly than aggregate demand.
D)increase aggregate demand more rapidly than aggregate supply.

Question

Quizplus · Accepted Answer

Cuts in marginal tax rates may lead to an increase in aggregate demand, but they do not necessarily increase aggregate supply more rapidly than aggregate demand. This can lead to inflationary pressures in the economy, making option B incorrect as well. Options A and D are also incorrect as they do not relate to the impact of marginal tax rate cuts on the economy.

A Criticism of Cuts in Marginal Tax Rates Is That