The Laffer Curve illustrates the relationship between:
A. Tax rates and tax revenue
B. Interest rates and investment
C. Money supply and inflation
D. Inflation and unemployment
Answer: Option A
Solution (By JKSSB Mock Tests)
The Laffer Curve shows that beyond a certain point, increasing tax rates may lead to a decrease in total tax revenue due to reduced economic activity and tax evasion.
Explanation:
The GDP deflator is calculated as (Nominal GDP / Real GDP) × 100 and reflects price changes of all goods and services produced domestically.
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