The Laffer Curve

question 206

Multiple Choice

The Laffer curve

• A) initially slopes upward as increasing tax rates lead to increasing tax revenue but eventually will slope downward as increasing tax rates lead to decreasing tax revenue.
• B) slopes downward throughout its range since increasing tax rates will always lead to decreases in tax revenue.
• C) slopes upward throughout its range since increasing tax rates will always lead to increases in tax revenue.
• D) is horizontal because tax revenue is independent of the rate of interest.

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Definitions:

Protestant Ethic

A concept in sociology that relates Protestantism to a strong work ethic, frugality, and the economic success of Protestant communities.

Spirit of Capitalism

A term popularized by sociologist Max Weber to describe the set of values and attitudes endorsing hard work, thrift, and efficiency in one’s calling, which he believed underpinned capitalist societies.

Max Weber

A sociologist, philosopher, and political economist from Germany whose concepts significantly impacted the fields of social theory and research.

Benevolence

The quality of being well-meaning; kindness and generosity toward others.