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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