If an Economist Recommends That the Government Reduce the Tax

question 108

Multiple Choice

If an economist recommends that the government reduce the tax rate in order to increase tax revenues (based on the Laffer curve) ,she is implicitly assuming that the economy is currently operating at a point

• A) inside the Laffer curve.
• B) outside the Laffer curve.
• C) on the upward-sloping portion of the Laffer curve.
• D) on the downward-sloping portion of the Laffer curve.
• E) where tax revenues are maximized.

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