Use the graph below to answer the questions that follow. What curve is shown on

Question

Use the graph below to answer the questions that follow. What curve is shown on the graph? What is represented by point T O The Hubbert Curve O The Laffer Curve O The Philips Curve O The Lorenz Curve T. A tax rate of 50%. O Nirvana. The most tax revenue that can be collected The highest possible tax Tax Revenue rate Tax Rate Based on this curve, what is true about tax revenue and the tax ra Tax revenue decreases as the tax rate increases up to a certain point, beyond which tax revenue increases as the tax rate decreases. Tax revenue increases as the tax rate increases up to a certain point, beyond which tax revenue decreases as the tax rate increases. O Tax revenue and tax rate have an inverse relationship O Tax revenue increases as the lax rate increases

Explanation / Answer

1)

A curve which represents relationship between tax revenue and tax rate is known as Laffer curve

so the given graph is a Leffer curve

2)

In the graph , point T* represents the most tax revenue that can be collected.

3)

Tax revenue increases as tax rate increases up tp a certain point , beyond which tax revenue decreases as the tax rate increases.

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