According to the Laffer curve, tax evasion occurs in the same conditions that promote ______.
a. maximum tax revenues
b. high incentives to work
c. low incentives to invest
d. maximum savings
c. low incentives to invest
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Regardless of how price inelastic the supply curve, tax revenue from a per-unit tax rises the more price inelastic the demand curve is.
Answer the following statement true (T) or false (F)
How do changes in income tax policies affect aggregate demand?
A) Higher taxes increase corporate investment and aggregate demand. B) Higher taxes reduce disposable income, consumption, and aggregate demand. C) Higher taxes increase aggregate supply and thus increase aggregate demand as well. D) Higher taxes increase disposable income, consumption, and aggregate demand.
An increase in price will result in an increase in total revenue if demand is:
A) perfectly elastic. B) relatively elastic. C) inelastic. D) unit elastic.
Valeria is a closed economy, where consumption totals $3 billion, tax payments are $300 million, government spending is $1 billion, and GDP is $5 billion. Private saving amounts to
a. $1.7 billion and Valeria's government runs a budget deficit. b. $1.7 billion and Valeria's government runs a budget surplus. c. $1 billion and Valeria's government runs a budget deficit. d. $1 billion and Valeria's government runs a budget surplus