In a 2012 Wall Street Journal column, economists Edward Prescott and Lee Ohanian claimed that, in order to promote faster economic growth, the government should
A) increase tax rates on individuals with high incomes, and leave tax rates on other individuals unchanged.
B) equalize tax rates on all individuals, regardless of how much they earn.
C) decrease tax rates on income and increase tax rates on consumption.
D) increase the after-tax benefits to successful entrepreneurship and risk-taking.

Question

Quizplus · Accepted Answer

Prescott and Ohanian argue that by increasing the after-tax benefits to successful entrepreneurship and risk-taking, the government can encourage innovation and investment, which will stimulate economic growth. This approach incentivizes individuals to take on greater risk and invest in new ventures, thus boosting economic activity. The other options (A, B, and C) do not specifically address the issue of promoting faster economic growth through entrepreneurship and risk-taking.

In a 2012 Wall Street Journal Column, Economists Edward Prescott