A curve showing the relationship between tax rates and tax revenues is called a __________ curve.
A) Phillips
B) Keynesian
C) Gaussian
D) Laffer

Question

Quizplus · Accepted Answer

The Laffer curve shows that as tax rates increase, there comes a point where tax revenues start to decrease because high taxes discourage work and investment, and incentivize tax evasion or other forms of noncompliance. The curve is named after economist Arthur Laffer, who popularized the idea in the 1970s. The other answer choices are unrelated to tax revenue and taxation.

A Curve Showing the Relationship Between Tax Rates and Tax