The Laffer Curve Illustrates That

question 123

Multiple Choice

The Laffer curve illustrates that

• A) there are two tax rates at which zero tax revenues are raised.
• B) a decrease in tax rates can cause an increase in tax revenues.
• C) an increase in tax rates can cause an increase in tax revenues.
• D) an increase in tax rates can cause a decrease in tax revenues.
• E) all of the above

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Definitions:

Receivables Turnover Ratio

A financial metric used to measure how efficiently a company collects cash from its credit sales by dividing net credit sales by average accounts receivable.

Credit Sales

Sales made by a business that allow the buyer to pay at a later date, typically recorded as accounts receivable.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material and labor expenses.

Liquidity Ratio

A financial metric used to determine how quickly a company can pay off its short-term liabilities with its liquid assets.