What do supply-side economists predict will happen if tax reductions motivate individuals to work more and encourage businesses to invest more?

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Aggregate supply will rise, while aggregate demand will fall.Aggregate supply will rise, leading to higher output and lower price levels.Aggregate supply will rise, causing both output and price levels to increase.Both aggregate supply and aggregate demand will grow, resulting in higher prices.

Explanation

According to supply-side economic theory, lowering taxes boosts incentives to work and invest, which increases aggregate supply. This increase in supply typically leads to a decrease in aggregate demand.