Supply-Side Economist Arthur Laffer Has Argued That

question 79

Multiple Choice

Supply-side economist Arthur Laffer has argued that

• A)there is no empirically proven relationship between tax rates and incentives.
• B)large reductions in personal and corporate income taxes will increase aggregate supply much more than aggregate demand.
• C)the only way to eliminate inflation is to increase taxes to induce a recession severe enough to eliminate inflationary expectations.
• D)large cuts in income taxes will increase aggregate demand more than aggregate supply.

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Definitions:

Rationing Mechanism

A system used to allocate scarce goods, services, or resources among people with competing needs or desires.

Tariff

A tax imposed by a government on goods and services imported from other countries, designed to raise revenue or protect domestic industries.

Imported Oil

Oil that is brought into a country from foreign sources for use in energy production, manufacturing, and other applications. It contrasts with domestically produced oil.

Price Floor

A government or regulatory-imposed minimum price that can be charged for a good or service, intended to ensure fair remuneration for producers or to protect consumers from excessively low prices.