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.

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Definitions:

Dissociative Fugue

A state in which someone leaves home, then, days or months later, suddenly realizes he is in a strange place and doesn’t know how he got there; often understood as a means of coping with (and escaping from) extremely painful events.

Mood Disorder

A psychological disorder characterized by the elevation or lowering of a person's mood, such as depression or bipolar disorder.

Major Depression

Major depression is a mental health disorder characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities, significantly affecting daily functioning.

Generalized Anxiety Disorder

A mental health condition characterized by excessive, unrealistic worry and tension, even if there is little or nothing to provoke the anxiety.