The Laffer curve studies the relationship between
A) tax rates and tax revenues.
B) monetary policy and tax revenues.
C) open market operations and the interest rate.
D) taxes and the real interest rate.

Question

Quizplus · Accepted Answer

The Laffer curve shows the relationship between tax rates and tax revenues. It suggests that at some point, increasing tax rates will lead to a decrease in tax revenues as people and businesses either find ways to evade taxes or reduce their economic activity in response to higher rates.

The Laffer Curve Studies the Relationship Between