Refer to the information provided in Figure 17.1 below to answer the questions that follow. Figure 17.1
-Refer to Figure 17.1. A decrease in tax rates will definitely decrease tax revenue if the economy is at a point such as ________ on the Laffer Curve.
A) A
B) B
C) C
D) both A and B

Question

Refer to the information provided in Figure 17.1 below to answer the questions that follow.  Figure 17.1
-Refer to Figure 17.1. A decrease in tax rates will definitely decrease tax revenue if the economy is at a point such as ________ on the Laffer Curve.
A) A 
B) B 
C) C 
D) both A and B

Quizplus · Accepted Answer

At both points A and B on the Laffer Curve, a decrease in tax rates will lead to a decrease in tax revenue. This is because the tax rate is already beyond the revenue-maximizing point, so further decreases in tax rates will only lead to a decrease in the government's revenue. Therefore, the correct choice is D, both A and B.

Refer to the Information Provided in Figure 17