The Laffer curve shows that increasing ________ increases ________ when ________ low.
A) tax revenue; potential GDP; tax revenue is
B) tax rates; tax revenue; tax rates are
C) potential GDP; tax revenue; tax revenue is
D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

The Laffer curve illustrates that increasing tax rates can lead to an increase in tax revenue when the initial tax rates are low. This is because at lower tax rates, the incentive to work and invest is not significantly hindered, and thus, a higher tax rate can collect more revenue without drastically affecting economic activity.

The Laffer Curve Shows That Increasing ________ Increases ________ When

The Laffer Curve Shows That Increasing Increases When