The supply-side effects of a reduction in taxes are the result of
A) increases in the disposable income of households accompanying reductions in tax rates.
B) the stimulus effects of increases in government expenditures.
C) increased attractiveness of productive activity relative to leisure and tax avoidance.
D) reductions in interest rates that generally accompany expansionary fiscal policy.

Question

Quizplus · Accepted Answer

A reduction in taxes increases the reward for work and investment, making productive activities more attractive than leisure or tax avoidance. This can lead to an increase in the supply of goods and services, as well as an increase in investments and job creation.

The Supply-Side Effects of a Reduction in Taxes Are the Result