Question

17. What assumption is made with supply-side economics? A. Increased federal spending will slow inflation, bringing prices down. B. Tax cuts will slow inflation, keeping prices down. C. Increased federal spending will stimulate the economy, bringing in more tax revenue. D. Tax cuts will stimulate the economy, eventually bringing in more tax revenue.

Answer 1

The answer to the question is letter D. Tax cuts will stimulate the economy, eventually bringing in more tax revenue.

The increased government revenue from a faster-growing economy would be enough to compensate completely for the short-term costs of a tax cut, and that tax cuts could cause overall revenue to increase( that's a fact).
Some advocates of the supply-side economics claim that  tax cuts ultimately led to an overall increase in governmental revenue due to stronger economic growth.