What effects do supply-side economists believe that lowering taxes have?
A) It lowers aggregate demand and increases aggregate supply.
B) It lowers both aggregate demand and aggregate supply.
C) It increases both aggregate demand and aggregate supply.
D) It increases aggregate demand and decreases aggregate supply.

Question

Quizplus · Accepted Answer

Supply-side economists believe that lowering taxes leads to an increase in incentives to work, save, and invest. This, in turn, leads to an increase in the supply of goods and services in the economy as businesses have more resources to invest and expand their operations. Additionally, lower taxes can stimulate consumer demand as individuals have more disposable income to spend. Therefore, supply-side economists believe that lowering taxes increases both aggregate demand and aggregate supply.

What Effects Do Supply-Side Economists Believe That Lowering Taxes Have