Question

In 1993 the Federal government boosted income tax rates. In the seven years that followed:A. tax revenues expanded rapidly.B. the unemployment rate increased.C. tax revenues fell slightly.D. productivity growth slowed.

Answer 1

A) tax revenues expanded rapidly.

Step-by-step explanation:

Bill Clinton is one of the few presidents that didn't have to deal with economic recessions. If tax rates increased and the economy kept growing, then total tax revenue should have increased a lot or expanded rapidly.

Many economists believed that what happened during Clinton's presidency was impossible. Generally speaking, supply side economists argue that the economy will grow if the government reduces taxes and regulations. But Clinton did exactly the opposite and the US economy was at its peak. That is the problem with economic theory, it cannot be tested, it must be lived (or survived, depending on the case).