The supply-side effects of tax cut arise because taxes act

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The supply-side effects of a tax cut arise because taxes act as (a stimulus/an incentive/a disincentive) to work, save, and provide entrepreneurial services.

The supply-side from from an increase in government expenditure arise because government expenditure increases the quantities of (public goods and services/transfers to the poor).

So, a tax cut increases people's (disincentive/incentive) to work, to save, and to provide entrepreneur services, all of which lead to an increase in aggregate supply and potential GDP.

Reference no: EM131392939

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