Which of the following ideas is a major element of trickle down economics?A.Corporations have an obligation to pay for social welfare programs.B.Increasing government spending is the best way to fight inflation.C.Economic aid works better than military action to combat communism.D.Cutting taxes on wealthy Americans will help businesses grow.
Question
Which of the following ideas is a major element of trickle down economics?A.Corporations have an obligation to pay for social welfare programs.B.Increasing government spending is the best way to fight inflation.C.Economic aid works better than military action to combat communism.D.Cutting taxes on wealthy Americans will help businesses grow.
Solution
The major element of trickle down economics from the options provided is D. Cutting taxes on wealthy Americans will help businesses grow.
Trickle-down economics, also referred to as supply-side economics, argues that economic benefits provided to businesses and upper income levels will indirectly benefit the broad population. The theory suggests that tax breaks or benefits for businesses and the wealthy will make their way down to everyone else. These benefits to the wealthy include tax cuts on businesses, high-income earners, capital gains, and dividends.
So, the idea is that when government helps companies, they can produce more and hence hire more people and pay them better. The wealth then "trickles down" from the top to the bottom, benefiting those at the bottom of the income pyramid.
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