Which of the following is most likely to increase the incentive to invest, produce, and employ others?
A) an increase in government expenditures to provide subsidies for large banks that made bad investment decisions
B) an increase in government expenditures that changes the composition of aggregate demand
C) a reduction in tax rates
D) an increase in payments to unemployed workers financed by borrowing

Question

Quizplus · Accepted Answer

Reducing tax rates increases the amount of disposable income available to individuals and businesses, which can lead to an increase in investment, production, and employment. The other options involve government expenditures or borrowing, which may not directly incentivize private sector activity.

Which of the Following Is Most Likely to Increase the Incentive