Supply-side economists argue cuts in tax rates

Question

Quizplus · Accepted Answer

Supply-side economists argue that cuts in tax rates can stimulate economic growth, which in turn can generate additional tax revenues that partially offset the loss of revenue from the tax cuts. This is known as the Laffer Curve. However, the extent to which tax cuts can raise revenues is debated and depends on many factors such as the initial tax rate, the elasticity of the tax base, and the specific economic conditions. Therefore, the correct answer is B, which states that tax cuts can raise tax revenues.

Supply-Side Economists Argue Cuts in Tax Rates