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Suppose That in a Certain Nation the Flat Income Tax

Question 43

Multiple Choice

Suppose that in a certain nation the flat income tax rate of 40 percent is reduced to 35 percent and as a result the tax base rises from $400 billion to $600 billion.As a result,ax revenues __________,indicating the nation is on the __________ portion of its Laffer curve.


A) rise; upward-sloping
B) rise; downward-sloping
C) fall; upward-sloping
D) fall; downward-sloping

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