Which of the following fiscal policy initiatives focuses on the supply side of the economy?
A) lower marginal income tax rates
B) building roads and bridges
C) personal tax refunds
D) increased pay for government employees
E) higher marginal tax rates

Question

Quizplus · Accepted Answer

Lowering marginal income tax rates is a supply-side fiscal policy initiative because it aims to reduce the tax burden on businesses and individuals, which can encourage increased production and investment in the economy. This can lead to an increase in the supply of goods and services in the economy. Building roads and bridges (B) would primarily be considered a demand-side fiscal policy initiative, as it aims to create jobs and stimulate spending in the short term. Personal tax refunds (C) and increased pay for government employees (D) are also demand-side fiscal policy initiatives, as they increase the disposable income and purchasing power of individuals. Higher marginal tax rates (E) would be considered a contractionary fiscal policy initiative, aimed at reducing demand in the economy by reducing disposable income and discouraging spending.

Which of the Following Fiscal Policy Initiatives Focuses on the Supply