Refer to the information provided in Figure 17.1 below to answer the questions that follow. Figure 17.1
-Refer to Figure 17.1. If the economy is at a point such as C on the Laffer curve, a(n) ________ in tax rates will ________ tax revenue.
A) increase; increase
B) decrease; decrease
C) decrease; increase
D) change; not change

Question

Refer to the information provided in Figure 17.1 below to answer the questions that follow.  Figure 17.1
-Refer to Figure 17.1. If the economy is at a point such as C on the Laffer curve, a(n) ________ in tax rates will ________ tax revenue.
A) increase; increase 
B) decrease; decrease 
C) decrease; increase 
D) change; not change

Quizplus · Accepted Answer

According to the Laffer curve, if the economy is at a point beyond the optimal tax rate (point A), then increasing tax rates will result in a decrease in tax revenue, while decreasing tax rates will result in an increase in tax revenue. Therefore, at point C, decreasing tax rates will result in an increase in tax revenue.

Refer to the Information Provided in Figure 17