The Laffer Curve Indicates That

question 211

Multiple Choice

The Laffer Curve indicates that

• A) when tax rates are high, a rate reduction may lead to an increase in tax revenue.
• B) when tax rates are low, an increase in tax rates will generally lead to a reduction in tax revenues.
• C) an increase in tax rates will always lead to an increase in tax revenues.
• D) the deadweight losses resulting from taxation are small at the tax rate that maximizes the revenues derived by the government.