Author Question: Which of the following propositions would a proponent of supply-side economics be most likely to ... (Read 114 times)

s.tung · **on:** Jun 30, 2018

Which of the following propositions would a proponent of supply-side economics be most likely to stress?
a. Higher marginal tax rates will lead to a reduction in the budget deficit and lower interest rates, because they expand government revenues.
b. Higher marginal tax rates promote economic inefficiency and thereby retard aggregate output, because they encourage investors to undertake low-productivity projects with substantial tax-shelter benefits.
c. Income redistribution payments will exert little impact on real aggregate supply, since they do not consume resources directly.
d. A tax reduction will increase the disposable income of households. Thus the primary impact of a tax reduction on aggregate supply will stem from the influence of the tax change on the size of the budget deficit or surplus.

Question 2

The Board of Governors of the Federal Reserve is:
a. appointed by the president, and each governor serves a 7-year term.
b. appointed by the president, and each governor serves a 14-year term.
c. elected by Congress, and each governor serves a 10-year term.
d. elected by Congress, and each governor serves a 4-year term.
e. elected by Congress, and each governor serves a 7-year term