The Laffer Curve Argues That Increasing Tax Rates

question 5

Multiple Choice

The Laffer curve argues that increasing tax rates

• A)above a certain point actually decreases total tax revenues.
• B)is the best method to reduce the federal deficit.
• C)above a certain point actually encourages productive investments.
• D)up to a certain point is necessary for economic justice.

Apply the concept of budget constraints to personal finance decisions.

Analyze the impact of changes in prices and income on consumer equilibrium.

Calculate the effects of taxes and subsidies on consumer choices.

Master the concept of utility and how it relates to individual preferences.

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Definitions:

Thyroid Gland

An endocrine gland located in the neck that produces hormones regulating growth, metabolism, and energy production.

Chromosomes

Thread-like structures located inside the nucleus of animal and plant cells, made of protein and a single molecule of DNA, that carry genetic information.

Recessive Genes

Genes that are expressed in offspring only when inherited from both parents, as opposed to dominant genes, which are expressed when inherited from just one parent.

Dominant Genes

Genes that overpower their recessive counterparts and determine the phenotype of an organism.