According to the supply-side view of fiscal policy, if the impact of tax revenues is the same, does it make any difference whether the government cuts taxes by either reducing marginal tax rates or increasing the personal exemption allowance()
A. No, both of the methods of cutting taxes will exert the same impact on aggregate supply.
B. No, people in both cases will increase their savings expecting higher future taxes and thereby offset the stimulus effect of lower current taxes.
C. Yes, the lower tax rates alone will increase the incentive to earn marginal income and thereby stimulate aggregate supply.