According to the Laffer curve as tax rates increase tax revenue ?
Correct answer: A. initially increase and then decrease
- A. initially increase and then decrease
- B. decrease continuously
- C. rise continuously
- D. initially decrease and then increase
Explanation
The Laffer curve reflects a trade-off: at low tax rates, raising rates increases revenue, but beyond the revenue-maximising rate, higher rates discourage work and investment, causing revenue to fall.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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