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    Question

    The Laffer Curve represents the relationship

    between:
    A Tax rates and government revenue Correct Answer Incorrect Answer
    B Tax rates and inflation Correct Answer Incorrect Answer
    C Inflation and unemployment Correct Answer Incorrect Answer
    D Tax rates and GDP growth Correct Answer Incorrect Answer

    Solution

    The Laffer Curve shows that government revenue initially increases with higher tax rates but decreases after a certain point due to reduced economic activity and tax compliance.

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