If the government cut the tax rate from 90 percent to 30 percent, what would happen??

Question

If the government cut the tax rate from 90 percent to 30 percent,

a. there would be an increase in tax revenue.

b. there would be a decrease in tax revenue.

c. there would be no loss in tax revenue.

d. productive activity would be discouraged.

e. there would be no tax

Which of the following is not a means to finance government spending?

a. Government subsidies

b. Government debt

c. Personal income taxes

d. Money creation

e. Capital gains taxes

Answer 1

B, A

Answer 2

"A" - because business activity will increase, check Laffer curve for more details.

"A" - subsidies are expenditures not income.