A Senator States: "We Need to Cut Taxes in Order

Multiple Choice

A senator states: "We need to cut taxes in order to increase incentives to work and produce, so that we can pull the nation out of this economic slump." A mainstream economist who is a critic of this policy would likely reply that:

A) Rather than cutting taxes there should be a decrease in government spending to address the problem
B) Rather than cutting taxes, monetary policy should become tighter to control the inflation rate
C) Increasing government spending is a surer way to increase production and pull the nation out of this economic slump
D) Cutting taxes will only reduce output further, and aggravate the situation