The 'Laffer curve' suggests that beyond a certain tax rate, an increase in the tax rate may: MCQ with Answer and Explanation

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The 'Laffer curve' suggests that beyond a certain tax rate, an increase in the tax rate may:

A. reduce total tax revenue

B. increase total tax revenue

C. eliminate all tax revenue immediately

D. leave revenue unchanged

Answer: Option A

Solution (By JKSSB Mock Tests)

The Laffer curve suggests very high tax rates can reduce work and investment, lowering tax revenue.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'Aadhaar Payment Bridge System' enables:

A. foreign exchange trading

B. direct benefit transfers using Aadhaar number

C. stock trading

D. insurance claims

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Correct Answer: Option B

Explanation:
APBS enables direct benefit transfers using Aadhaar number.

This question belongs to: Economy GK Economy Set 1

Question #2

The concept of 'Pareto Efficiency' implies that:

A. Income is equally distributed

B. No reallocation can make one person better off without making someone else worse off

C. All markets are perfectly competitive

D. Resources can be reallocated to make someone better off without making anyone worse off

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Correct Answer: Option B

Explanation:
A Pareto efficient allocation is one where it is impossible to make any individual better off without making at least one individual worse off.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'long-run Phillips curve' is vertical at:

A. the natural rate of unemployment

B. full employment with zero unemployment

C. zero inflation

D. maximum inflation

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Correct Answer: Option A

Explanation:
The long-run Phillips curve is vertical at the natural rate of unemployment.

This question belongs to: Economy GK Economy Set 1

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