According to the Laffer curve, a decrease in the tax rate will increase tax revenue
A) if the economy is on the positively sloped section of the curve.
B) if the economy is on the negatively sloped section of the curve.
C) if the economy is at the farthest point out on the curve.
D) no matter the location of the economy on the curve.

Question

Quizplus · Accepted Answer

The Laffer curve illustrates the relationship between tax rates and tax revenue, suggesting that there is an optimal tax rate that maximizes revenue. If the economy is on the negatively sloped section of the curve, a decrease in the tax rate will increase tax revenue because it is beyond the point of maximum revenue efficiency, where higher tax rates actually lead to lower total revenue.

According to the Laffer Curve, a Decrease in the Tax