1
QuizMultiple Choice

The Reagan Years

Question 1 • MS U.S. History - SS3307 B-IC

Based on the theory of supply-side economics, how does cutting taxes encourage economic growth?

Answer
A
It allows businesses to raise prices on basic goods.
B
It allows consumers to spend more money on products.
C
It increases government revenue to fund public projects.
D
It provides more money for government assistance programs.

Explanation

Supply-side economics holds that lower taxes leave households and businesses with more money to spend or invest. When consumers have more after-tax income, they can buy more products, which can increase demand and encourage businesses to produce and grow. The best choice is “It allows consumers to spend more money on products.”

AI-written and checked against the verified answer.

Next