Data from the effects of the substantial tax rate reductions in the 1980s
a. cast serious doubt on the Laffer curve as a guide for tax policy.
b. are consistent with the principles illustrated in the Laffer curve.
c. generally reject the idea that lower tax rates can lead to higher tax revenue.
d. support an "inverted Laffer curve" in which reducing tax rates for those with high incomes leads to lower tax revenue.
B
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Suppose that, at a given production plan, the marginal product of labor is 6 and the marginal product of capital is 3. In a graph with labor on the horizontal and capital on the vertical axis, this implies that the technical rate of substitution at that production plan is
A. -1/2 B. -2 C. -18 D. None of the above
In economics, products are considered "differentiated" only if
a. they are physically or chemically different b. sellers decide that they are different c. buyers think that they are different d. the government determines that they are different e. they are produced by different firms
"Any tax cut to increase demand for output should favor lower-income people" is a ________ statement about ________ policy.
A. normative; monetary B. normative; fiscal C. positive; monetary D. positive; fiscal
The price of a large pepperoni pizza used to be $12, but this week the price rose to $18. With a budget of just $28, you can't afford as many pizzas at the higher price. This change in consumer behavior reflects the
A) real income effect. B) substitution effect. C) nominal income effect. D) concept of diminishing marginal utility.