Based on the Laffer Curve, a Cut in the Tax

question 54

Multiple Choice

Based on the Laffer Curve, a cut in the tax rate from 100 percent to a point before the maximum level of tax revenue will:

• A)decrease real GDP.
• B)increase tax revenues.
• C)decrease tax revenues.
• D)have no effect on tax revenues.

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Definitions:

Utilities

Services such as electricity, gas, water, and sewer that are used by businesses and households, often considered basic necessities.

Raw Material

The basic material from which a product is made, typically unprocessed or minimally processed before being used in production.

Work in Process

The inventory account that records products in production but not yet completed.

Property, Plant, and Equipment

Long-term tangible assets owned by a business that are used in producing goods or providing services.