"Our tax proposal is for a 25-percent across-the-board reduction in personal income tax rates over the next three years... The second part of our proposal is geared to the economy's supply side—to encouraging business investment, which in turn will create new jobs."
— President Ronald Reagan, Address to the Nation on Federal Tax Reduction Legislation, July 27, 1981
Which of the following economic policies is most directly associated with the goals described in the excerpt?
- AIncreasing federal spending on social welfare programs to boost consumer demand
- BExpanding federal regulations on businesses to protect consumer safety
- Cutting tax rates on corporations and individuals to stimulate private investmentAnswer
- DEstablishing new federal job-creation programs modeled after the New Deal
Answer
Cutting tax rates on corporations and individuals to stimulate private investment
The correct answer is correct because cutting tax rates on corporations and individuals was the central mechanism of supply-side economics (Reaganomics) aimed at stimulating private investment, creating jobs, and encouraging economic growth.
Step-by-Step Solution
Key Concept
Reaganomics and supply-side economics