Kenedy-Johnson tax cut

[goelmohit2002]

Hi All,

In the below question [spoiler]OA = B....Can someone please tell why not E [/spoiler]?

Some economists view the Kennedy-Johnson tax cut of 1964, which radically reduced corporate and individual taxes, as the impetus for the substantial prosperity enjoyed by the United States in the late 1960’s and early 1970’s.
Which of the following, if true, would most weaken the claim that the tax cut of 1964 was the impetus for economic prosperity?
(A) Modernized, more productive factories were built in the late 1960’s as a result of the funds made available by the tax cut.
(B) Improved economic conditions in Western Europe and Japan resulted in substantially increased demand for United States manufactured goods in the late 1960’s.
(C) The tax cut of 1964 contained regulations concerning tax shelters that prompted investors to transfer their savings to more economically productive investments.
(D) Personal income after taxes rose in the years following 1964.
(E) In the late 1960’s, unemployment was relatively low compared with the early 1960’s.

[madhur_ahuja]

Hi All,

In the below question [spoiler]OA = A....Can someone please tell why not E [/spoiler]?

Some economists view the Kennedy-Johnson tax cut of 1964, which radically reduced corporate and individual taxes, as the impetus for the substantial prosperity enjoyed by the United States in the late 1960’s and early 1970’s.
Which of the following, if true, would most weaken the claim that the tax cut of 1964 was the impetus for economic prosperity?
(A) Modernized, more productive factories were built in the late 1960’s as a result of the funds made available by the tax cut.
(B) Improved economic conditions in Western Europe and Japan resulted in substantially increased demand for United States manufactured goods in the late 1960’s.
(C) The tax cut of 1964 contained regulations concerning tax shelters that prompted investors to transfer their savings to more economically productive investments.
(D) Personal income after taxes rose in the years following 1964.
(E) In the late 1960’s, unemployment was relatively low compared with the early 1960’s.

E does weakens if we are sure that the loss in unemployment was due to tax cuts. There is no such Cause- Effect given.

In A it is explicitly stated that it is because of tax cut, hence is better.

[goelmohit2002]

Hi Madhur,

Sorry I made mistake of posting as OA = A....it is actually B....can you please tell why B better then E ?

[scoobydooby]

would go for B .

to weaken the claim: KJ tax cut of 64 caused the economic prosperity.

A. strengthens

B. correct IMO, identifes an alternative cause for the economic prosperity. weakens

C. strengthens

D. out of scope. we do not what effect rise of income taxes had.

E. relative comparison of unemployment in early 60s and late 60s is out of scope. we are concerned with KJ tax cut of 64 causing economic prosperity or not.

[madhur_ahuja]

Hi Madhur,

Sorry I made mistake of posting as OA = A....it is actually B....can you please tell why B better then E ?

Well, you helped me correct the meaning of impetus in my mind

[goelmohit2002]

E. relative comparison of unemployment in early 60s and late 60s is out of scope. we are concerned with KJ tax cut of 64 causing economic prosperity or not.

Hi Scooby,

Why this is OOS.....why not

less unemployment => More people employed.....=> More money in the system. => Prosperity.

OG too does not say it is OOS.....it says that "less unemployment of late 1960's can be attributed to tax cuts"....I am not sure how can we assume the same ?

[kris77]

I believe the answer should be B