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The Laffer Curve is a relationship between

The Laffer Curve is a relationship between Correct Answer tax rate and tax revenue

The correct answer is tax rate and tax revenue.

  • Laffer curve explains the relationship between tax rate and tax revenue.
  • According to the Laffer Curve
    • At lower as well as higher rate of tax, the tax revenue low.
    • Tax revenue is high at the optimal rate of tax.
  • ​Lower rate leads to lower tax collection.
  • At a higher rate of tax, there is high tax evasion and tax revenue is also low.
  • At an optimal rate of tax, there is no tax evasion and so the tax revenue reaches the maximum.

​Additional Information:

  • Phillips Curve: Relationship between unemployment and revenue.
  • Kuznets Curve: Relationship between economic development and the environment.

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