The idea that reductions in tax rates will increase tax revenue is illustrated by the:
A) Laffer Curve
B) Short-run Phillips Curve
C) Long-run Phillips Curve
D) Aggregate supply curve

Question

Quizplus · Accepted Answer

The Laffer Curve depicts the relationship between tax rates and government revenue, showing that at a certain point, reducing tax rates can actually increase revenue by stimulating economic growth and incentivizing more production and consumption activities. This theory suggests that tax cuts can be a means of promoting economic growth and increasing government revenue in the long run.

The Idea That Reductions in Tax Rates Will Increase Tax