During the Reagan Administration, the Laffer Curve Was Used to Argue

question 90

Multiple Choice

During the Reagan administration, the Laffer curve was used to argue that:

• A) the supply-side effects of tax cuts are relatively small.
• B) discretionary tax cuts are unwise because they create stagflation.
• C) lower income tax rates could increase tax revenues.
• D) a "flat tax" would simplify the tax code and stimulate economic growth.

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Definitions:

Supply Shifts

Changes in the quantity supplied of a good or service resulting from factors other than its price, such as manufacturing advancements or input costs.

Mustard Recall

An event where mustard products are withdrawn from the market due to reasons like contamination or mislabeling.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers is equal to the quantity supplied by producers.

Swiss Cheese

A type of cheese known for its distinct holes or 'eyes' and a mild, nutty flavor, originating from Switzerland.