1. The Laffer curve illustrates the concept that
a. when marginal tax rates are quite high, a decrease in the tax rate may cause tax revenues to increase.
b. when marginal taxes are quite low, an increase in the tax rate will probably cause tax revenues to decline.
c. an increase in marginal tax rates will always cause tax revenues to increase.
d. an increase in marginal tax rates will always cause tax revenues to decrease.
2. The primary value of GDP lies in its ability to
a. indicate how much leisure time the people of a nation have.
b. compare the quality of a nation's products between two periods widely separated in time.
c. reflect the welfare of a society relative to a previous period.
d. indicate short-term changes in the output rate of a nation.