The Laffer Curve Demonstrates That Raising Tax Rates

question 55

Multiple Choice

The Laffer curve demonstrates that raising tax rates:

• A) increases then decreases tax revenues.
• B) always increases tax revenues.
• C) always decreases tax revenues.
• D) decreases then increases tax revenues.

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Definitions:

Sales Price

The amount of money charged for a product or service, or the sum that customers are willing to pay for it.

Straight-line Method

A depreciation technique that allocates an equal amount of depreciation expense each year over the useful life of an asset.

Estimated Salvage Value

The expected value that an asset will realize upon its sale at the end of its useful life, used in computing depreciation.

Depreciable Cost

The total cost of an asset that is subject to depreciation, which includes the purchase price minus any salvage value.