Q41.Consider the following statements:
1. Phillips Curve is representation of the relationship between tax rates and tax revenue collected by governments.
2. Laffer curve is a historical inverse relationship between rates of unemployment and corresponding rates of inflation that result within an economy
Which of the above statement(s) is/are correct?
Q41.Consider the following statements:
1. Phillips Curve is representation of the relationship between tax rates and tax revenue collected by governments.
2. Laffer curve is a historical inverse relationship between rates of unemployment and corresponding rates of inflation that result within an economy
Which of the above statement(s) is/are correct?
The correct option is D (d) None of the above
Laffer Curve is representation of the relationship between tax rates and tax revenue collected by governments.
It illustrates the concept of taxable income elasticity.
It is a bell shaped curve and one of the uses of the Laffer Curve is to allow for optimal taxation.
The Laffer curve is typically represented as a graph which starts at 0% tax with zero revenue, rises to a maximum rate of revenue at an intermediate rate of taxation, and then falls again to zero revenue at a 100% tax rate.
The Phillips curve is a historical inverse relationship between rates of unemployment and corresponding rates of inflation that result within an economy.
Stated simply, decreased unemployment, (i.e., increased levels of employment) in an economy will correlate with higher rates of inflation.
(d) None of the above
Laffer Curve is representation of the relationship between tax rates and tax revenue collected by governments.
It illustrates the concept of taxable income elasticity.
It is a bell shaped curve and one of the uses of the Laffer Curve is to allow for optimal taxation.
The Laffer curve is typically represented as a graph which starts at 0% tax with zero revenue, rises to a maximum rate of revenue at an intermediate rate of taxation, and then falls again to zero revenue at a 100% tax rate.
The Phillips curve is a historical inverse relationship between rates of unemployment and corresponding rates of inflation that result within an economy.
Stated simply, decreased unemployment, (i.e., increased levels of employment) in an economy will correlate with higher rates of inflation.
