Asked by
Michelle Chenier
on Dec 17, 2024
Verified
Which of the following scenarios is consistent with the Laffer curve?
A) An increase in the tax rate always increases tax revenue.
B) The tax rate is 1 percent, and tax revenue is very high.
C) The tax rate is 99 percent, and tax revenue is very high.
D) A decrease in the tax rate always increases tax revenue.
Laffer Curve
A theoretical representation showing the relationship between tax rates and government revenue, positing that there is an optimum tax rate that maximizes revenue.
- Understand the link between the rates of taxation and the revenue accrued by the government, including considerations of the Laffer curve effects.
Verified Answer
DT
Learning Objectives
- Understand the link between the rates of taxation and the revenue accrued by the government, including considerations of the Laffer curve effects.