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What Happens If a Government Increases the Tax Rate

Question 172

Multiple Choice
What happens if a government increases the tax rate
A)As the tax rate increases, tax revenue continually rises and deadweight loss continually falls.
B)As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss rises but also begins to fall as tax revenue falls.
C)As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss continually rises.
D)As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss falls for a while, but begins to rise as tax revenue falls.

What happens if a government increases the tax rate


A) As the tax rate increases, tax revenue continually rises and deadweight loss continually falls.
B) As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss rises but also begins to fall as tax revenue falls.
C) As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss continually rises.
D) As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss falls for a while, but begins to rise as tax revenue falls.

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