Which of the following is a feature of the 'Modern Supply-Side Economics' emphasis?
A. Only monetary expansion
B. Complete neglect of incentives
C. Only demand management through fiscal expansion
D. Tax incentives and structural reforms to raise potential output and improve incentives to work, save and invest
Answer: Option D
Solution (By JKSSB Mock Tests)
Supply-side approaches stress policies that expand the productive capacity of the economy by improving incentives, reducing distortions and raising the efficiency of resource allocation.
Explanation:
Ricardian Equivalence, proposed by David Ricardo and revived by Robert Barro, argues that rational agents anticipate future taxes to repay debt, so government borrowing does not stimulate demand.
Explanation:
Major sources of central government revenue include corporation tax, personal income tax, and the central share of GST, along with customs and other duties.
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