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Economics (AS & A Level) · Oct / Nov 2022 · Paper 33 · Question 28

9708Effectiveness of policy options to meet all macroeconomic objectives

What is illustrated by the Laffer curve?

  1. AAs income increases, fewer hours will be worked.
  2. BAs income increases, tax revenue will increase.
  3. CAs the tax rate increases, tax revenue always increases.
  4. DAs the tax rate increases, tax revenue will eventually fall.

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Correct answer: D. As the tax rate increases, tax revenue will eventually fall.

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