Dynamic Tax Analysis Generally Predicts

question 2

Multiple Choice

Dynamic tax analysis generally predicts

• A) that the higher the tax rate is, the higher the tax revenue will continue to be into the future.
• B) that the higher tax rates lead to higher revenues only to a point at which revenues will begin to decrease due to a diminishing tax base.
• C) that lower tax rates will always and continuously lead to increased tax revenues.
• D) that lower tax rates are always going to lead to decreased tax revenues.

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Definitions:

Arc

A luminous discharge of electricity through gas.

Voltage

The electric potential difference between two points, or the push that drives an electric current between those points.

Conduction

The transfer of heat or electricity through a substance, resulting from a difference in temperature or electrical potential.

Wilhelm Roentgen

The German physicist who discovered X-rays in 1895, an achievement for which he was awarded the first Nobel Prize in Physics in 1901.