Question

The Laffer curve relates _____________________

a) the tax rate to the deadweight loss of the tax.
b) the price elasticity of supply to the deadweight loss of the tax.
c) the tax rate to tax revenue raised by the tax.
d) government welfare payments to the birth rate.

Answer 1

Answer:

c) the tax rate to tax revenue raised by the tax.

Explanation:

The Laffer curve shows the correlation between the tax rate and the revenue that the government that is imposing those taxes is generating, it was first proposed by Arthur Laffer and it tried to explain the best point where maximum tax rate would mean maximun tax revenue, and search for that spot where the revenue would be maximized by the tax rate.