When a country is on the downward-sloping side of the Laffer curve,what will cutting tax rates do
A)lower tax revenues and increase deadweight loss
B)lower both tax revenues and deadweight loss
C)increase tax revenues and decrease deadweight loss
D)increase both tax revenues and deadweight loss

Question

Quizplus · Accepted Answer

When a country is on the downward-sloping side of the Laffer curve, cutting tax rates can increase tax revenues because the lower rates encourage more economic activity, which broadens the tax base. Additionally, it decreases deadweight loss by reducing the economic inefficiencies associated with high tax rates.

When a Country Is on the Downward-Sloping Side of the Laffer