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Statement I: The key difference between supply-siders and other economists is in their judgment about how much output would be changed by a change in the tax rates or regulations facing taxpayers.
Statement II: A supply-side economist would argue that a big tax cut would cause an output increase,but not inflation,when the economy is already near full employment.
A) Statement I is true and statement II is false.
B) Statement II is true and statement I is false.
C) Both statements are true.
D) Both statements are false.
Supply-Siders
Economic theorists who believe that lower taxes, decreased regulation, and a reduced role of government in the economy will lead to increased production and supply, driving economic growth.
Tax Rates
The percentage of income or value of goods taxed by the government, varying across different income brackets and types of goods.
Inflation
A sustained increase in the general price level of goods and services in an economy over a period of time, usually measured by the consumer price index (CPI).
- Learn the core ideas of supply-side economics and its approach to taxing policies.
- Distinguish between the views of supply-side economists and other economic schools on fiscal and monetary policies.
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Learning Objectives
- Learn the core ideas of supply-side economics and its approach to taxing policies.
- Distinguish between the views of supply-side economists and other economic schools on fiscal and monetary policies.
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