Macroeconomics + Economy 2009 Update 18th Edition by Campbell McConnell, Sean Masaki Flynn,Stanley Brue

Exercise 2

THE LAFFER CURVE-DOES IT SHIFT Congress did not substantially change Federal income tax rates between 1993 and 2000. Visit the Bureau of Economic Analysis Web site, www.bea.gov/ , and use the interactive feature for National Income and Product Accounts tables to find Table 3.2 on Federal government current receipts and expeditures. Find the annual revenues from the Federal income tax from 1993 to 2000. What happened to those revenues over those years Given constant tax rates, what do the changes in tax revenues suggest about changes in the location of the Laffer Curve If lower (or higher) tax rates do not explain the changes in tax revenues, what do you think does