A recent government proposal to increase marginal taxes on those making over $200,000 a year will generate $100 billion in new tax revenues.A supply-side economist would argue that the actual revenue raised will be
A) less than $100 billion because some people will respond by working less.
B) exactly $100 billion because there are no offsetting factors to a tax increase.
C) more than $100 billion because lower income people will work harder when they perceive the tax system is more fair.
D) more than $100 billion because interest rates will also be affected.
Correct Answer:
Verified
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