The graph that shows the relationship between the size of a tax and the tax revenue collected by the government is known as a ?
Correct answer: D. Laffer curve
- A. none of these answers
- B. Reagan curve
- C. Keynesian curve
- D. Laffer curve
- E. Henry George curve.
Explanation
The Laffer curve shows the relationship between the tax rate and government tax revenue. Revenue may rise with tax rates initially but can fall when rates become excessively high.
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Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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