QUESTION $30$

Which of the following would supply$-$side economist Arthur Laffer agree with?

A$.$ Government maximizes tax revenues when it maximizes marginal tax rates.

B$.$ Depending on how people respond to incentives $($elasticity$)$ determines the shape of the Laffer curve.

C$.$ The large federal budget deficits of the $1980\text{'}$s were caused by the $1981$ Reagan tax cuts.

D$.$ Reductions in marginal tax rates can only stimulate aggregate demand.

E$.$ The tax base $($size of the economy$)$ is assumed as a constant variable irrespective of tax rates.