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LAFFER CURVE: The graphical inverted-U relation between tax rates and total tax collections by government. Developed by economist Arthur Laffer, the Laffer curve formed a key theoretical foundation for supply-side economics of President Reagan during the 1980s. It is based on the notion that government collects zero revenue if the tax rate is 0% and if the tax rate is 100%. At a 100% tax rate no one has the incentive to work, produce, and earn income, so there is no income to tax. As such, the optimum tax rate, in which government revenue is maximized, lies somewhere between 0% and 100%. This generates a curve shaped like and inverted U, rising from zero to a peak, then falling back to zero. If the economy is operating to the right of the peak, then government revenue can be increased by decreasing the tax rate. This was used to justify supply-side economic policies during the Reagan Administration, especially the Economic Recovery Tax Act of 1981 (Kemp-Roth Act).
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OPPORTUNITY COST, PRODUCTION POSSIBILITIES The production possibilities analysis, which is the alternative combinations of two goods that an economy can produce with given resources and technology, can be used to illustrate opportunity cost--the highest valued alternative foregone in the pursuit of an activity.
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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time looking for a downtown retail store trying to buy either a set of steel-belted radial snow tires or a wall poster commemorating the 2000 Presidential election. Be on the lookout for slow moving vehicles with darkened windows.
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The average bank teller loses about $250 every year.
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"A man is not finished when he is defeated. He is finished when he quits. " -- President Richard Nixon
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AIO
Action Information Organization
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