Question

What is the idea behind “cutting taxes” (lowering taxes). select one:

a. people will have more money available to them to spend and help the economy grow.
b. the government is trying to increase its tax revenue.
c. the government is trying to have more immediate money for transfer payments
d. people will decide to start paying for military protection on their own?

Answer 1

The correct option is A. The effect of tax cut is reduction in the amount of money that the government is generating and increase in the amount of money available to those whose taxes are reduced. Government usually cut taxes in order to boost the economy through increased spending.