Which of the following would be considered a supply-side policy?
A) decreasing taxes to increase the incentive to work
B) an increase in government spending that would lead to increased aggregate demand
C) increasing the amount of Social Security contributions paid by businesses to help fund the Social Security program
D) an increase in government regulations that require businesses to internalize pollution costs

Question

Quizplus · Accepted Answer

Supply-side policies aim to increase the supply of goods and services in the economy by incentivizing production. Decreasing taxes, as in choice A, increases the incentive to work and produce, therefore increasing the supply of goods and services. Choices B, C, and D are demand-side policies, which aim to increase aggregate demand in the economy to stimulate economic growth.

Which of the Following Would Be Considered a Supply-Side Policy