When a Country Is on the Downward-Sloping Side of the Laffer

question 139

Multiple Choice

When a country is on the downward-sloping side of the Laffer curves, a cut in the tax rate will

• A)decrease tax revenue and decrease the deadweight loss.
• B)decrease tax revenue and increase the deadweight loss.
• C)increase tax revenue and decrease the deadweight loss.
• D)increase tax revenue and increase the deadweight loss.

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Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary accounts' balances to permanent accounts, thereby resetting the temporary accounts for the next period.

Revenue Accounts

Accounts that track the income a company generates from its normal business activities, such as sales of goods or services.

Retained Earnings

The portion of a company's profits that is kept or retained rather than paid out as dividends to shareholders, often used for reinvestment in the business.

Dividends Account

An account that records the amount of dividends declared by a company to be distributed to its shareholders.