According to Supply-Side Theories, What Happens If the Government Cuts

question 12

Multiple Choice

According to supply-side theories, what happens if the government cuts the tax rate?

• A) Workers keep less of each additional dollar they earn, so work effort increases, and aggregate supply shifts right.
• B) Workers keep less of each additional dollar they earn, so work effort decreases, and aggregate supply shifts left.
• C) Workers keep more of each additional dollar they earn, so work effort increases, and aggregate supply shifts right.
• D) Workers keep more of each additional dollar they earn, so work effort decreases, and aggregate supply shifts left.

---

Definitions:

Hippocampus

A major component of the brain located in the medial temporal lobe, important for learning and memory.

Anterograde Amnesia

A condition that prevents an individual from forming new memories after the event that caused the amnesia.

Memory

The faculty by which the mind stores and remembers information; it is essential for learning and the formation of our identity.

Nonsense Syllables

Meaningless sets of two consonants with a vowel sound in the middle, used in memory and learning experiments.