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Economics (AS & A Level) · May / June 2026 · Paper 32 · Question 20

9708Effectiveness of policy options to meet all macroeconomic objectives

The diagram shows the Laffer curve. Which combination correctly identifies the labels on the axes?

  1. Ahorizontal (x) axis: cumulative percentage of income; vertical (y) axis: cumulative percentage of tax revenue
  2. Bhorizontal (x) axis: income inequality; vertical (y) axis: per capita income
  3. Chorizontal (x) axis: tax rate; vertical (y) axis: tax revenue
  4. Dhorizontal (x) axis: tax revenue as a percentage of GDP; vertical (y) axis: tax rate as a percentage of GDP

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Correct answer: C. horizontal (x) axis: tax rate; vertical (y) axis: tax revenue

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