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Laffer curve is a relationship between
Tax rate and tax buoyancy
Tax buoyancy and tax elasticity
Tax rate and tax elasticity
Tax revenue and tax rate
Correct Option is Tax revenue and tax rate
Learning: It shows the relationship between tax rates and the amount of tax revenue collected by governments. The Laffer Curve suggests that, as taxes increase from low levels, tax revenue collected by the government also increases. It also shows that tax rates increasing after a certain point (T*) would cause people not to work as hard or not at all, thereby reducing tax revenue. Eventually, if tax rates reached 100%, shown as the far right on his curve, all people would choose not to work because everything they earned would go to the government.
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