Which of the Following Propositions Would a Proponent of Supply-Side

Multiple Choice

Which of the following propositions would a proponent of supply-side economics be most likely to stress?

A) Because they expand government revenues, higher marginal tax rates will lead to a reduction in the budget deficit and to lower interest rates.
B) Because they encourage investors to undertake low-productivity projects with substantial tax-avoidance benefits, higher marginal tax rates promote economic inefficiency.
C) Because they do not consume resources directly, income redistribution payments will exert little impact on real aggregate supply.
D) 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.