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 decrease in tax rates will definitely decrease tax revenue if the economy is at a point such as ________ on the Laffer Curve.
A) A
B) B
C) C
D) both A and B

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 decrease in tax rates will definitely decrease tax revenue if the economy is at a point such as ________ on the Laffer Curve.
A) A 
B) B 
C) C 
D) both A and B

Quizplus · Accepted Answer

The Laffer Curve shows the relationship between tax rates and tax revenue. At point A, a decrease in tax rates will lead to an increase in tax revenue. At point B, a decrease in tax rates will lead to a decrease in tax revenue. At point C, a decrease in tax rates will have no effect on tax revenue. Therefore, the correct answer is D.

Refer to the Information Provided in Figure 32