Question

The Laffer curve shows that Group of answer choices at some specific tax rate, tax revenue is maximized. tax revenue is constant overall tax rates. tax revenue decreases as tax rates increase. tax revenue is maximized at multiple tax rates. tax revenue increases as tax rates increase.

Answer 1

The Laffer curve shows that at some specific tax rate, tax revenue is maximized.

The Laffer Curve theory was developed by  Arthur Laffer in 1974. The curve shows the relationship between tax rates and tax revenue.  According to this theory, higher income tax rate diminishes the desire of labour to work and invest. This is because higher income increases the amount of tax to be paid. This means that at some point, increase in the tax rate would decrease government revenue rather than increase it.

The theory submits that there is an optimal tax rate at which tax income is maximised. Once this point is exceeded, increase in tax rate would reduce the revenue earned by the government.

A similar question was answered here: brainly.com/question/15090055