A senator states, "We need to cut taxes in order to increase incentives to work and produce, so that we can pull the nation out of this economic slump." A mainstream economist who is a critic of this policy would likely reply that
A)rather than cutting taxes, there should be a decrease in government spending to address the problem.
B)rather than cutting taxes, monetary policy should become tighter to control the inflation rate.
C)increasing government spending is a surer way to increase production and pull the nation out of this economic slump.
D)cutting taxes will only reduce output further and aggravate the situation.

Question

Quizplus · Accepted Answer

A mainstream economist might argue that increasing government spending can directly boost demand and production, thus helping to pull the nation out of an economic slump more effectively than tax cuts.

A Senator States, "We Need to Cut Taxes in Order