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Suppose That in a Certain Nation the Flat Income Tax

Question 26

Multiple Choice

Suppose that in a certain nation the flat income tax rate of 30 percent rises to 35 percent and as a result the tax base falls from $400 billion to $375 billion.As a result,tax 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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