What Happens If a Government Increases the Tax Rate

Multiple Choice

What happens if a government increases the tax rate

A) As the tax rate increases, tax revenue continually rises and deadweight loss continually falls.
B) As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss rises but also begins to fall as tax revenue falls.
C) As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss continually rises.
D) As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss falls for a while, but begins to rise as tax revenue falls.