Which economic theory suggests that tax cuts can increase government revenue by boosting growth?
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Correct answer: Laffer Curve
The Laffer Curve suggests that lower tax rates can sometimes increase total revenue by encouraging economic activity. It was a key concept behind supply-side economics.
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More Supply-Side Economics and Reaganomics questions
- Which policy was a key part of Reaganomics?
- What effect did Reagan's tax cuts aim to have on businesses?
- Which Act significantly reduced income tax rates during Reagan's presidency?
- What was a major criticism of Reaganomics?
- Which group was expected to benefit first from supply-side policies?
- What is meant by the 'trickle-down' effect?