Supply-side economics says lower taxes make people work harder & invest more, boosting the economy. So, answer B! (Heavy tariffs & limited government roles don't quite fit.)
The correct answer is b. reducing the marginal rate of taxation will promote higher levels of work and investment.
Here's why:
- Supply-side economics focuses on increasing the supply of goods and services in the economy to boost economic growth. It posits that lower taxes incentivize businesses and individuals to work harder, invest more, and ultimately produce more.
- Heavy tariffs (option a) fall under protectionist policies aimed at hindering imports, not necessarily increasing domestic production. This goes against the principle of free trade often favored by supply-side economists.
- Limiting government intervention (option c) aligns with some supply-side theories, but doesn't specifically address taxation or its impact on work and investment.
- High government spending (option d) contradicts the general supply-side principle of reduced government involvement in the economy. While some may argue for strategically targeted spending, it's not a core tenet of supply-side economics.
Therefore, considering the emphasis on reducing taxes to incentivize work and investment, option b accurately reflects the central idea of supply-side economics.