According to the Laffer curve, an increase in the tax rate will increase tax revenue a)...
According to the Laffer curve, an increase in the tax rate will increase tax revenue
a) if the economy is on the positively sloped section of the curve.
b) no matter the location of the economy on the curve.
c) if the economy is on the negatively sloped section of the curve.
d) if the economy is at the farthest point out on the curve.
Homework Answers
Answer
Option a
a) if the economy is on the positively sloped section of the curve.
A Laffer curve shows tax and tax revenue as the tax rate increases the tax revenue increases first but alter it decreases because the equilibrium quantity decreases more than the increase in tax rate.
the positive slope shows the increase in tax revenue when the tax rate is increasing.
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According to the Laffer curve, an increase in the tax rate will
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