-Refer to Exhibit 11-1.The economy is currently at point 1.In this situation,supply-side economists would most likely propose _______________ to make the price level ______________ and Real GDP ___________.
A) cutting marginal tax rates; fall; rise
B) raising marginal tax rates; fall; rise
C) raising government spending; fall; rise
D) cutting government spending; rise; fall
E) cutting marginal tax rates; rise; fall

Question

-Refer to Exhibit 11-1.The economy is currently at point 1.In this situation,supply-side economists would most likely propose _______________ to make the price level ______________ and Real GDP ___________.
A) cutting marginal tax rates; fall; rise 
B) raising marginal tax rates; fall; rise 
C) raising government spending; fall; rise 
D) cutting government spending; rise; fall 
E) cutting marginal tax rates; rise; fall

Quizplus · Accepted Answer

Supply-side economists believe that cutting marginal tax rates can stimulate economic growth by incentivizing investment and work, which in turn can lead to an increase in Real GDP and potentially a decrease in the price level due to increased supply.