Critics of supply-side economics: a. argue that a tax cut will increase aggregate supply by more than it increases aggregate demand. b. contend that the relationship between tax rates and economic incentives is small and of uncertain direction. c. believe that a decline in tax rates will increase tax revenues. d. point out that tax cuts enable households to substitute work for leisure.

B. Contend that the relationship between tax rates and economic incentives is small and of uncertain direction.

Explanation:

Supply-side can be explained to be government policies that attempts to increase productivity and increase efficiency in the state economy which is when successful, they will shift aggregate supply (AS) to the right and enable higher economic growth in this process.

Its main two types are:

Free-market supply-side policies involve policies to increase competitiveness and free-market efficiency. For example, privatisation, deregulation, lower income tax rates, and reduced power of trade unions.

Interventionist supply-side policies involve government intervention to overcome market failure. For example, higher government spending on transport, education and communication.

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