Which Is a Basic Proposition of Supply-Side Economics

question 180

Multiple Choice

Which is a basic proposition of supply-side economics?

• A) The Federal Reserve should target the federal funds rate rather than the money supply.
• B) Tax-hikes on business reduce productivity and output and reduce aggregate supply.
• C) Low marginal tax rates reduce incentives to work, saving, and investment.
• D) Transfer payments increase incentives to work.

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Definitions:

Extrinsic Motivations

Encouragement stemming from external stimuli like cash rewards, public acclaim, educational scores, and accolades.

Insulin

An organic compound released by the pancreas, responsible for maintaining blood sugar levels by enabling glucose to be absorbed by tissues.

Food Intake

The consumption of food by an organism to provide energy and nutrients for bodily functions.

Digest Protein

The biochemical process by which proteins are broken down into their constituent amino acids by enzymes in the digestive system.