If the economy is on the downward-sloping portion of the Laffer curve,a(an)__________ in tax rates will __________ tax revenues.
A) decrease; reduce
B) increase; raise
C) decrease; raise
D) decrease; not change
E) increase; not change

Question

Quizplus · Accepted Answer

On the downward-sloping portion of the Laffer curve, a decrease in tax rates will raise tax revenues because it encourages more economic activity, leading to an overall increase in taxable income.

If the Economy Is on the Downward-Sloping Portion of the Laffer