Question

Supply-side economics stresses that:___________.

1. budget deficits will stimulate demand, output, and employment.
2. budget deficits will lead to higher interest rates, which will weaken their expansionary impact.
3. an increase in government expenditures financed by higher tax rates will cause real income to rise.
4. changes in marginal tax rates exert important effects on real output and employme

Answer 1

4) changes in marginal tax rates exert important effects on real output and employment

Step-by-step explanation:

Supply side economics is very similar to Keynesian economics, both focusing on increasing aggregate demand to boost the economy. The main difference is that Keynesian economics stresses the importance of increasing government spending, while supply side economics favors cutting taxes.

Both approaches generally result in the same, an increase in aggregate demand, decrease in unemployment, increase in aggregate supply, and on the negative side, the government's deficit increases as well as the inflation rate.

Answer 2

changes in marginal tax rates exert important effects on real output and employment-4

Step-by-step explanation:

Supply-side economic focuses on creating a better atmosphere or conditions for businesses and is majorly concerned with reduction of marginal taxtand deregulation.

According to the this policy, companies are able to hire more workers if the changes in the marginal tax are favourable ie reduced leading to a higher levels of production, and increased production capacity which results to job growth creating more demand which will further improve the economy.