According to the Laffer Curve, Higher Tax Rates Will Result

question 81

Multiple Choice

According to the Laffer curve, higher tax rates will result in lower tax revenues if:

• A) only the poor are taxed.
• B) workers are encouraged to work more hours.
• C) economic activity is severely discouraged.
• D) only the rich are taxed.

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Definitions:

Capital Account

An account used to track the investments made into a company by its owners, plus the retained earnings of the business.

Withdrawal Account

An account used in partnership accounting to record the amounts drawn out of the business by the partners for personal use.

Relative Ease

The level of simplicity or difficulty with which a task can be completed when compared to other tasks.

Formation

The process of legally creating a company or other organization; involves registration with relevant authorities and may include drafting a constitution or by-laws.