Which of the following beliefs is not part of supply-side economics? 1. A sharp

Question

Which of the following beliefs is not part of supply-side economics?

1. A sharp reduction in corporate income taxes would discourage U.S. corporations from shifting their production facilities to other countries, thus leading to a decrease in the unemployment rate.
2. A sharp reduction in personal income taxes would bring forth a higher capital stock through greater saving and investment.
3. A sharp reduction in personal income taxes would bring forth higher labor-force participation.
4. A reduction in tax rates would lead to increased output and actually allow tax revenues to rise.

Explanation / Answer

Tax revenue (T) relates to aggregare expenditure (AE) which is the demand side component.

Hence the answer is 4.

A reduction in tax rates would lead to increased output and actually allow tax revenues to rise is not a supply side concept.

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