According to supply-side economics, tax cuts:

Question

A) cause dangerous budget deficits.

B) unfairly sacrifice equity in favor of efficiency.

C) increase incentives to work and save and cause increases in potential output.

D) increase output by directly increasing aggregate demand.

Answer 1

C) but if they are financed by running a deficit they also increase demand so D)  is also applicable.  

Answer 2

C) increase incentives to work and save and cause increases in potential output.

Edit: Meg - question asks about supply-side, not demand-side, so "D" is out of context. :)

Answer 3

B