-Consider the above figure. This curve suggests that as the government continues to raise the tax rate, the revenues that are collected will eventually
A) increase.
B) decline.
C) approach infinity.
D) become negative.

Question

-Consider the above figure. This curve suggests that as the government continues to raise the tax rate, the revenues that are collected will eventually
A) increase. 
B) decline. 
C) approach infinity. 
D) become negative.

Quizplus · Accepted Answer

The curve described is likely referring to the concept of the Laffer Curve, which illustrates the relationship between tax rates and tax revenue. It suggests that there is an optimal tax rate that maximizes revenue. Beyond this optimal point, increasing tax rates actually leads to a decrease in tax revenue, as higher taxes discourage economic activity and tax compliance.

-Consider the Above Figure