SAT Subject US History Practice Question 1135: Answer and Explanation

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Question: 1135

2. Supply-side economics was designed to

A. increase demand by cutting taxes.
B. provide more goods and services.
C. provide money for new business investment by cutting taxes.
D. make government grow.
E. cut the size of the government.

Correct Answer: C


Supply-side programs cut the taxes of the rich so that they would start new businesses. This was supposed to increase employment and then the supply of goods. Demand-side programs would promote employing people directly, as the Keynesians and Franklin Roosevelt had done.

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