-Consider the above figure. This curve suggests that as the government raises the tax rate, a point will eventually be reached at which the revenues that are collected will
A)increase.
B)decline.
C)approach infinity.
D)become negative.

Question

-Consider the above figure. This curve suggests that as the government raises the tax rate, a point will eventually be reached at which the revenues that are collected will
A)increase. 
B)decline. 
C)approach infinity. 
D)become negative.

Quizplus · Accepted Answer

The curve being referred to is likely the Laffer Curve, which suggests that there is an optimal tax rate that maximizes revenue. Beyond this point, increasing tax rates will lead to a decrease in total revenue collected.

-Consider the Above Figure