Which of the following propositions would a proponent of supply-side economics be most likely to stress?
a. Because they expand government revenues, higher marginal tax rates will lead to a reduction in the budget deficit and to lower interest rates.
b. Because they encourage investors to undertake low-productivity projects with substantial tax-avoidance benefits, higher marginal tax rates promote economic inefficiency.
c. Because they do not consume resources directly, income redistribution payments will exert little impact on real aggregate supply.
d. The primary impact of a tax reduction on aggregate supply will stem from the influence of the tax change on the size of the budget deficit or surplus.
B
You might also like to view...
Refer to Figure 2-2. Suppose Vidalia is currently producing 20 dozen orchids per period. How many roses is it also producing, assuming that resources are fully utilized?
A) 30 dozen roses B) 50 dozen roses C) 100 dozen roses D) 150 dozen roses
A major difference between stocks and bonds is that
A) bonds pay their owners dividends while stocks pay interest. B) bonds pay their owners interest while stocks pay dividends. C) the interest on a bond depends on the earnings of the corporation and is not guaranteed while dividends on stock are legally required. D) bonds represent ownership while stock represent debt.
A major problem with the negative income tax is that
a. low tax rates imply low break-even incomes. b. low tax rates imply high break-even incomes. c. high tax rates imply low minimums. d. All of the above are correct.
Refer to the table below. At what output level or levels are this firm's owners doing as well as or better than they could do with the next best use of their resources?QuantityTotal RevenueExplicit CostsImplicit Costs1050365157563620100937251251258301501619
A. 10, 15, 20, and 25 units B. 10, 15, and 20 units C. 10 units D. 10 and 15 units