The Laffer Curve

question 54

Multiple Choice

The Laffer curve

• A) shows the relationship between sales taxes and income taxes in the United States.
• B) indicates that tax revenues are greatest when marginal tax rates are greatest.
• C) relates the size of the government debt to the level of national output.
• D) shows an inverse relationship between tax revenues and government spending.
• E) has been used to demonstrate that a decline in the marginal tax rate may cause a rise in total tax revenue.

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Definitions:

Sole Proprietor

An individual who owns and operates a business by themselves, without forming a corporation or a partnership, bearing full responsibility for the business's debts and obligations.

Schedule C

A form used by self-employed individuals or sole proprietors to report their business income and expenses to the IRS.

Ordinary Gain

Ordinary gain refers to the profit that arises from the sale of an asset or property, which is taxable at standard income tax rates.

Receivables

Money owed to a business by its clients or customers for goods or services that have been delivered but not yet paid for.