According to the Laffer curve, if the economy is on the positively sloped section of the curve, then
A) both an increase and a decrease in tax rates will increase tax revenue.
B) a decrease in the tax rate will increase tax revenue.
C) an increase in the tax rate will increase tax revenue.
D) both an increase and a decrease in tax rates will decrease tax revenues.

Question

Quizplus · Accepted Answer

The Laffer curve illustrates the relationship between tax rates and tax revenue, suggesting that there is an optimal tax rate that maximizes revenue. On the positively sloped section of the curve, increasing tax rates will increase tax revenue, as the economy is below the optimal tax rate.

According to the Laffer Curve, If the Economy Is on the Positively