Data from the Effects of the Substantial Tax Rate Reductions

question 90

Multiple Choice

Data from the effects of the substantial tax rate reductions in the 1980s

• A) cast serious doubt on the Laffer curve as a guide for tax policy.
• B) are consistent with the principles illustrated in the Laffer curve.
• C) generally reject the idea that lower tax rates can lead to higher tax revenue.
• D) support an "inverted Laffer curve" in which reducing tax rates for those with high incomes leads to lower tax revenue.

---

Definitions:

Credit Default Swap

A financial derivative that allows an investor to "swap" or offset their credit risk with that of another investor.

Par Value

The face value of a bond or a stock, as stated by the issuing company, which may differ from its market value.

Zero-Coupon Bond

A zero-coupon bond is a type of bond that does not pay periodic interest but is issued at a significant discount to its face value and redeemed for its full face value at maturity.