Questions: "Tax cuts, by providing incentives to work, save, and invest, will raise employment and lower the price level." This argument is made by the:
monetarists.
classical economists.
Keynesian economists.
supply-side economists.
Transcript text: "Tax cuts, by providing incentives to work, save, and invest, will raise employment and lower the price level." This argument is made by the:
monetarists.
classical economists.
Keynesian economists.
supply-side economists.
Solution
Answer
The answer is supply-side economists.
Explanation
Option 1: Monetarists
Monetarists focus on the role of government in controlling the amount of money in circulation. They believe that managing the money supply is the key to controlling inflation and stabilizing the economy, rather than using fiscal policy like tax cuts to influence economic behavior.
Option 2: Classical Economists
Classical economists emphasize the self-regulating nature of markets and the importance of supply and demand. While they might support tax cuts for reducing government intervention, their primary focus is not on using tax cuts to specifically incentivize work, saving, and investment.
Option 3: Keynesian Economists
Keynesian economists advocate for active government intervention in the economy, especially through fiscal policy, to manage demand and address economic downturns. They typically focus on government spending rather than tax cuts as a tool for stimulating the economy.
Option 4: Supply-Side Economists
Supply-side economists argue that reducing taxes provides incentives for individuals to work, save, and invest, which in turn can lead to increased economic growth, higher employment, and potentially lower price levels. This perspective aligns with the statement in the question.