The Emphasis on the Greater Incentives to Produce, Created by Lower

question 90

Multiple Choice

The emphasis on the greater incentives to produce, created by lower taxes, has come to be known as:

• A) the trickle-down economics.
• B) the supply-side economics.
• C) the paradox of thrift.
• D) the permanent income hypothesis.
• E) monetarism.

---

Definitions:

Fixed Cost

A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If a fixed cost is expressed on a per unit basis, it varies inversely with the level of activity.

Margin of Safety Percentage

A metric that measures how much sales can drop before a business reaches its break-even point, typically expressed as a percentage.

Variable Expenses

Costs that vary directly with the level of production or business activity.

Contribution Margin

The amount by which sales revenue exceeds variable costs. It is used to cover fixed costs and generate profit.