The Laffer Curve Makes the Point That Cutting a Very

question 100

Multiple Choice

The Laffer curve makes the point that cutting a very high marginal tax rate can __________ the tax base enough so that tax revenues __________.

• A) lower; rise
• B) lower; fall
• C) raise; rise
• D) raise; fall

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Definitions:

Capital

Financial assets or the financial value of assets, such as funds held in deposit accounts or funds obtained from special financing sources.

Normal Balance

The side of the accounting equation on which increases to an account are recorded, typically debit for assets and expenses, and credit for liabilities, equity, and revenue.

T Account

A graphical representation of a general ledger account that depicts how any changes to that account are reflected on the debit and credit side.

Ledger

A book or collection of accounts in which account transactions are recorded.