Both Keynesians and supply-siders believe that tax cuts
A)will increase income by increasing aggregate supply.
B)will increase income by increasing aggregate demand.
C)will increase income but for different reasons.
D)will increase income in the Keynesian model but decrease income in the Supply-side model.

Question

Quizplus · Accepted Answer

Keynesians believe that tax cuts will increase income by stimulating aggregate demand, as people will have more disposable income to spend. Supply-siders believe that tax cuts will increase income by incentivizing individuals and businesses to work harder and invest more, leading to an increase in aggregate supply. While the reasons for the increase in income may differ, both agree that tax cuts can have a positive impact on the economy.

Both Keynesians and Supply-Siders Believe That Tax Cuts