According to the Laffer Curve

question 91

Multiple Choice

According to the Laffer curve,

• A) an increase in tax rates will always cause tax revenues to increase.
• B) when marginal tax rates are high, an increase in tax rates is likely to cause tax revenues to increase.
• C) when marginal taxes are low, an increase in tax rates will probably cause tax revenues to decline.
• D) when marginal tax rates are high, a reduction in tax rates may increase tax revenue.

---

Definitions:

Gross Profit

The difference between sales revenue and the cost of goods sold, indicating the efficiency of a company in producing and selling its products.

Goodwill

An intangible asset that arises when a buyer acquires an existing business, representing the value of the business's reputation, brand, and other unquantifiable elements.

Equity Method

An accounting method used to assess the profits earned by investments in other companies, where the investment's value is adjusted according to the investor’s share of the investee's profit or loss.

Net Loss

The negative financial result when a company's total expenses exceed its total revenues during a specified accounting period.