According to the Supply-Side View of Fiscal Policy, If the Impact

Multiple Choice

According to the supply-side view of fiscal policy, if the impact on tax revenues is the same, does it make any difference whether the government cuts taxes in a way that reduces marginal tax rates or in a way that does not reduce marginal tax rates?

A) ​No; both actions will exert the same impact on aggregate supply and demand.
B) ​Yes; only lower marginal tax rates will increase the incentive to earn income and thereby stimulate aggregate supply.
C) ​No; in both cases people will increase their saving in the expectation of higher future taxes and thereby offset the stimulus effect of lower taxes.
D) ​Yes; interest rates will increase if marginal tax rates are lowered, whereas they will tend to decrease if marginal tax rates are left unchanged.