The Laffer Curve Shows That as Tax Rates Increase

question 84

Multiple Choice

The Laffer curve shows that as tax rates increase

• A) initially tax revenues increase, then decrease.
• B) tax revenues decrease as the incidence of cheating on tax returns increases.
• C) tax revenues increase as more individuals and businesses have to pay taxes.
• D) tax revenues remain unchanged.

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Definitions:

Follistatin

A protein involved in muscle growth, reproduction, and the regulation of certain hormones.

Progesterone

A hormone produced by the ovaries involved in the menstrual cycle and pregnancy.