It is true that increasing demand for a limited number of products drives the price of Those products. However, if we cut tax rates then people will retain a higher percentage of their Income and will be encouraged to work harder and produce more. Therefore, the increase in demand resulting from greater disposable income will not result in higher prices for the products available? In the passage above, the author makes which of the following arguments?

A Reducing taxes is likely to result in less disposable income.

B Reducing taxes is likely to decrease demand

C Reducing taxes can fail to result in greater disposable income.

D Reducing taxes will probably restrict the availability of certain products.

Solution

Correct Answer: Option E

Solution

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