The main idea behind supply-side tax cuts is that
A)tax cuts increase spending, which increases aggregate supply.
B)some tax cuts can increase aggregate supply.
C)people like lower taxes and will spend more if they get them.
D)it is easier to shift aggregate supply than aggregate demand.

Question

Quizplus · Accepted Answer

Supply-side tax cuts are based on the idea that reducing tax rates can incentivize businesses and individuals to work, save, and invest more, leading to an increase in the supply of goods and services. However, not all tax cuts can have this effect. Supply-side tax cuts typically focus on reducing marginal tax rates on businesses and high-income earners, in the hopes that this will spur innovation, investment, and job creation. So, choice B is the best answer as it addresses the idea of specific tax cuts that can increase aggregate supply.

The Main Idea Behind Supply-Side Tax Cuts Is That