Which of the following best describes the economic philosophy behind the Revenue Act of 1964?

The Revenue Act of 1964 is primarily associated with supply-side economics, which emphasizes the idea that lower taxes can stimulate economic growth by increasing disposable income for individuals and businesses. The philosophy behind this approach is rooted in the belief that reducing tax rates encourages investing and spending, thereby leading to enhanced production, job creation, and ultimately, a healthier economy.

The act included significant tax cuts for individuals and corporations, reflecting the core tenets of supply-side principles. Proponents argued that these cuts would not only incentivize economic activity but also increase overall tax revenue in the long run as the economy expanded. This approach marked a departure from prior fiscal policies that placed greater emphasis on government spending as a means of stimulating demand, making the Revenue Act a watershed moment for supply-side economics.

In contrast, the other options represent different economic theories. Protectionism focuses on shielding domestic industries from foreign competition through tariffs and trade restrictions, which doesn't align with the goals of the Revenue Act. Keynesian economics emphasizes active government intervention to manage economic cycles, particularly through spending rather than cutting taxes. Monetarism centers on controlling the money supply to regulate the economy, a concept separate from the tax policy introduced by the Revenue Act. Thus, the economic philosophy inherent in the Revenue Act of