Figure 8-19. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax.

-Refer to Figure 8-19.The curve that is shown on the figure is called the

Question

Figure 8-19. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax.
 
-Refer to Figure 8-19.The curve that is shown on the figure is called the

Quizplus · Accepted Answer

The curve shown in the figure is the Laffer curve, which illustrates the relationship between tax rates and tax revenue. The curve shows that as tax rates increase, revenue initially increases but eventually begins to decrease as higher taxes discourage economic activity and reduce the tax base. This concept has been used to argue for lower tax rates as a way to increase overall revenue.