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hich of the following statements regarding a Laffer curve is the most plausible? a. Reducing a...

hich of the following statements regarding a Laffer curve is the most plausible?

a.

Reducing a high tax rate will have the same effect on tax revenue as reducing a low tax rate.
b.

Reducing a tax rate can never increase tax revenue.
c.

Reducing a high tax rate is less likely to increase tax revenue than is reducing a low tax rate.
d.

Reducing a high tax rate is more likely to increase tax revenue than is reducing a low tax rate.
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Answer #1

The Laffer curve is an inverted U shape drawn between tax revenue and tax rate.

As the tax rate increases, the total revenue increases and reaches to a maximum value after that the revenue will decline.

if the taxes are high, activities like investment are not supported and the total revenue will decline. Cutting taxes at this time will raise the total revenue and stimulate the economic incentives.

So, Reducing a high tax rate is more likely to increase the tax revenue than is reducing a low tax rate.

Option d. is correct

**if you liked the answer, then please upvote. Would be motivating for me. Thanks.

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