Refer to the information provided in Figure 32.1 below to answer the question(s) that follow. Figure 32.1
-Refer to Figure 32.1. A cut in tax rates will decrease tax revenue if the economy moves from Point
A) A to B.
B) B to A.
C) C to B.
D) A to D.

Question

Refer to the information provided in Figure 32.1 below to answer the question(s) that follow.  Figure 32.1
-Refer to Figure 32.1. A cut in tax rates will decrease tax revenue if the economy moves from Point
A) A to B. 
B) B to A. 
C) C to B. 
D) A to D.

Quizplus · Accepted Answer

A cut in tax rates will decrease tax revenue if the economy moves from a point where tax rates are already low (Point B) to a point where they are even lower (Point A), as the Laffer Curve suggests that beyond a certain point, lower tax rates lead to lower tax revenue.

Refer to the Information Provided in Figure 32