Test: AP US History

1.

Reagan's supply-side economics was based on the theory that __________.

reducing tariffs on America's largest trading partners would encourage other countries to spend more money on American products.

increasing taxes on America's wealthiest one-percent of the population would allow the federal government to reduce taxes for those beneath the poverty line.

taxing middle-class Americans at a higher rate would allow the federal government to reduce taxes for those beneath the poverty line.

heavily investing in the infrastructure through federal work programs would stimulate the economy.

reducing corporate taxes would cause those corporations to spend the additional money to purchase equipment and hire more employees, creating a trickle-down effect.

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