The Supply-Side Effects of a Reduction in Taxes Are the Result

question 48

Multiple Choice

The supply-side effects of a reduction in taxes are the result of

• A) increases in the disposable income of households accompanying reductions in tax rates.
• B) the stimulus effects of increases in government expenditures.
• C) increased attractiveness of productive activity relative to leisure and tax avoidance.
• D) reductions in interest rates that generally accompany expansionary fiscal policy.