The Figure Given Below Depicts the Tax Revenue for Different

question 56

Multiple Choice

The figure given below depicts the tax revenue for different tax rates applied by the government.?Figure 11.2

-Refer to Figure 11.2. If the tax rate were 100 percent, then:

• A) tax revenue would be maximized.
• B) no one would be willing to work.
• C) there would be a strong incentive to work.
• D) tax revenue would be greater than if the tax rate were 70 percent.
• E) tax revenue would be less than if the tax rate were zero percent.

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Definitions:

United States Treasury

A government department responsible for managing federal finances, issuing currency, collecting taxes, and paying bills on behalf of the United States government.

Primary Reserves

Assets that are held by banks that are readily available to meet immediate withdrawal demands, such as cash and deposits with central banks.

Excess Reserves

Funds that banks hold over and above the required minimum reserves specified by central banking authorities, which can be loaned out or invested.

Reserve Requirements

The minimum amount of reserves that banks must hold against deposits, set by central banks to ensure liquidity and control the money supply.