Based on the Laffer Curve, a Cut in the Tax

question 60

Multiple Choice

Based on the Laffer Curve, a cut in the tax rate from 100 percent to a rate lower than the maximum-revenue rate will:

• A) Decrease real GDP
• B) Increase tax revenues
• C) Decrease tax revenues
• D) Have no effect on tax revenues

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Icy Water

Water that is at or near its freezing point, often associated with extreme cold environments or conditions.

Policy Making

The process by which governments and other authoritative bodies develop and implement rules, laws, and guidelines.

Ideological

Pertaining to a system of ideas and ideals, especially one that forms the basis of economic or political theory and policy.

Contingent

Dependent on or conditioned by something else; not absolute or certain.