According to the Laffer Curve, a cut in the tax rate from above the maximum-revenue rate to a rate lower than the maximum-revenue rate will
A) decrease real GDP.
B) increase tax revenues.
C) decrease tax revenues.
D) have no effect on tax revenues.

Question

Quizplus · Accepted Answer

The Laffer Curve illustrates that cutting tax rates from a point above the maximum-revenue rate can actually increase tax revenues by incentivizing more economic activity, leading to a broader tax base.

According to the Laffer Curve, a Cut in the Tax