________ is a proposition that a strong proponent of supply side economics would most likely stress.
A)Higher marginal tax rates will lead to a reduction in the size of the budget deficit and lower interest rates as they depend on government revenues.
B)Higher marginal tax rates promote economic inefficiency and thereby retard aggregate output as they encourage investors to undertake low productivity projects with substantial tax shelter benefits.
C)Income redistribution payments will exert little impact on real aggregate supply as they do not consume resources directly.
D)A tax reduction will increase the disposable income of households, and thus, 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.
E)None of the above is a likely statement for a supply-side proponent.

Question

Quizplus · Accepted Answer

A strong proponent of supply side economics would most likely stress that higher marginal tax rates promote economic inefficiency and discourage productive investment. They believe that lower tax rates will stimulate economic growth, increase investment, and create more jobs, ultimately leading to higher tax revenues for the government. Option A is contrary to this view, as it suggests that higher tax rates will reduce the budget deficit and lower interest rates. Option C is unrelated to supply-side economics, and option D implies that the primary impact of a tax reduction would be through its effect on the budget deficit rather than its impact on economic efficiency and growth. Option E is also not a likely statement for a supply-side proponent.

________ Is a Proposition That a Strong Proponent of Supply