According to the supply-side view of fiscal policy

Reference no: EM131490916

Changes in which of the following are likely to affect interest rates?

Inflation expectations

Size of the federal deficit

Money supply

All of the above

According to the supply-side view of fiscal policy, if the impact on total tax revenues is the same, does it make any difference whether the government cuts taxes by either reducing marginal tax rates or increasing the personal exemption allowance?

i. No, both methods of cutting taxes will exert the same impact on aggregate supply

ii. No, people in both cases will increase their saving, expecting higher future taxes, and thereby offset the stimulus effect of lower current taxes.

Reference no: EM131490916

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