-Refer to the above diagram.If tax rates are between b and d,then supply-side economists are of the opinion that a(n):
A) increase in tax revenues will increase tax rates.
B) decrease in tax rates will increase tax revenues.
C) increase in tax rates will increase tax revenues.
D) decrease in tax revenues will decrease tax rates.

Question

-Refer to the above diagram.If tax rates are between b and d,then supply-side economists are of the opinion that a(n):
A) increase in tax revenues will increase tax rates. 
B) decrease in tax rates will increase tax revenues. 
C) increase in tax rates will increase tax revenues. 
D) decrease in tax revenues will decrease tax rates.

Quizplus · Accepted Answer

Supply-side economists believe that reducing tax rates between points b and d on the Laffer Curve can lead to an increase in tax revenues by stimulating economic activity and expanding the tax base.

-Refer to the Above Diagram