Question

Why are tax policies that cut taxes called trickle-down economics?

1. because the benefits are supposed to filter down to workers
2. because the benefits become less pronounced at every level
3. because the benefits are intended to help only the wealthy
4. because the benefits quickly cause a positive effec

Answer 1

Trickle-down economics are tax policies that reduce taxes for the wealthy with the expectation that the benefits will filter down to the rest of the economy, stimulating growth and increasing employment. However, the effectiveness and equity of these policies are widely debated.

Step-by-step explanation:

Tax policies that cut taxes, often referred to as trickle-down economics, are predicated on the belief that economic benefits will filter down from the wealthy, who receive tax cuts, to the broader economy. The theory suggests that when taxes for the wealthy are reduced, they will have more resources to invest in businesses and create jobs, which ultimately benefits all levels of society through increased employment and economic activity.

The expectation with trickle-down economics is that the increased spending by consumers and reinvestment by businesses due to tax cuts will stimulate the market, leading to economic growth. This growth theoretically leads to more tax revenue in the future as new workers are hired and businesses expand. However, this approach is often debated regarding its effectiveness and whether the purported benefits actually trickle down to middle and lower-income individuals.

Answer 2

Step-by-step explanation:

Trickle-down economics, also known as supply-side economics, is a theory that argues that cutting taxes on the wealthy and businesses will lead to greater economic growth, which in turn will benefit everyone in the economy, including workers and lower-income individuals. The theory is based on the idea that if the wealthy and businesses have more money, they will invest it in ways that create jobs and stimulate economic growth. The theory is also known as "the trickle-down theory" due to the belief that the benefits of tax cuts will "trickle down" to the rest of society.

So the reason why tax policies that cut taxes called trickle-down economics is 1. because the benefits are supposed to filter down to workers