The Laffer Curve

Multiple Choice

The Laffer curve

A) shows the relationship between sales taxes and income taxes in the United States.
B) indicates that tax revenues are greatest when marginal tax rates are greatest.
C) relates the size of the government debt to the level of national output.
D) shows an inverse relationship between tax revenues and government spending.
E) has been used to demonstrate that a decline in the marginal tax rate may cause a rise in total tax revenue.