Both Keynesians and Supply-Siders Believe a Tax Cut Will Lead

question 5

Multiple Choice

Both Keynesians and supply-siders believe a tax cut will lead to growth:

• A) and both agree it works through incentive effects.
• B) but Keynesians believe it works through incentive effects whereas supply-siders believe it works through aggregate demand.
• C) but Keynesians believe it works through aggregate demand whereas supply-siders believe it works through incentive effects.
• D) and both agree it works through aggregate demand.

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Definitions:

Poor People

Individuals or groups who lack the financial resources and possessions needed for a minimum standard of living.

Middle Class

A social group between the upper and working classes, including professional and business workers and their families.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved or is unattainable.

Administrative Cost

Refers to expenses related to the general operation of a business, including office supplies, management salaries, and other non-production related costs.