Answer-According to the Laffer curve, a cut in tax rates

Q: Answer-According to the Laffer curve, a cut in tax rates

Laffer Curve is an inverted-U shaped graph. A cut in tax rates will decrease tax revenues if the economy is on the positively sloped portion of the Laffer curve, and increase tax revenues if the economy is on the negatively sloped portion of the Laffer curve

Question

According to the Laffer curve, a cut in tax rates

A will always increase tax revenue

B will always decrease tax revenues

C will increase tax revenues if the economy is on the positively sloped portion of the Laffer curve, and reduce tax revenues if the economy is on the negatively sloped portion of the Laffer curve

D will decrease tax revenues if the economy is on the positively sloped portion of the Laffer curve, and increase tax revenues if the economy is on the negatively sloped portion of the Laffer curve

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According to the Laffer curve, a cut in tax rates

Solution