The Laffer curve reflects the view that when
A. tax rates are too low, raising them creates a greater incentive for suppliers to increase production.
B. tax rates are too high, lowering them not only creates greater incentive for suppliers to increase production, but also ends up generating higher tax revenues.
C. tax revenue is too low, the only way to increase it is through higher tax rates.
D. tax rates are too high, lowering them also reduces tax revenue.
Answer: B
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Suppose government expenditures on goods and services increase, transfers are unchanged, and taxes rise by less than the increase in expenditures. These changes in the government's budget cause
a. both the equilibrium interest rate and the equilibrium quantity of loanable funds to fall. b. both the equilibrium interest rate and the equilibrium quantity of loanable funds to rise. c. the equilibrium interest rate to rise and the equilibrium quantity of loanable funds to fall. d. the equilibrium interest rate to fall and the equilibrium quantity of loanable funds to rise.
The consumer price index increases from 200 to 208 . What is the inflation rate?