"Reduction in rate of taxation leads to more than proportionate increase in tax yield".This law is known as ____________.

Giffins Effect

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Laffer Effect

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

Gresham's Law

No worries! We‘ve got your back. Try BYJU‘S free classes today!

None of the above

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is B Laffer Effect
In economics, the Laffer curve is a representation of the relationship between rates of taxation and the resulting levels of government revenue.Proponents of the Laffer curve claim that it illustrates the concept of taxable income elasticity-i.e., taxable income will change in response to changes in the rate of taxation.

Suggest Corrections

Similar questions

Q. A tax is said to be if the tax revenues increase more than proportionately in response to a rise in national income or output.

An increase in government expenditure is likely to have a greater impact on national output than a reduction in taxes. Which of the following could be reasons for this?

Q. The argument for reduction in the rate of taxation to promote economic activity rests on the following premises:
1. Lower taxes increase the amount of savings
2. Moderate taxes lead to lower prices
3. It promotes consumption
4. It increases government's revenue.

Q. Proportionate increase in all factors of production resulting in a more than proportionate increase in output is a case of ___________.

State Government imposes a monthly tax on the salary of all the employees. The tax amount varies according to the income slab. The Central Government also imposes tax on the same income, which is known as the income tax. This is against the theory of taxation.

Which of the following is a conclusion which can be drawn from the facts stated in the above paragraph?

Join BYJU'S Learning Program