The laffer curve predicts the effects of change in the tax rate on which of the following? a)real gdp b)unemployment c)aggregate supply d)tax revenues

The correct answer is D.

The Laffer Curve represents the relationship between the tax rate and the total tax revenues collected by the economic authorities. It illustrates the incidence of the taxable income elasticity, the sensitiveness of the income earned by the economic agents on which the tax is applied, to variations in the tax rate.

A laffer curve is represented in the graph attached. Tax collection is 0 for 0% and 100% rates. Between these two values, the function will have an increasing section, a maximum and a decreasing section. Its maximum consitutes the tax rate that maximizes the total tax collection.

As citizens grow increasingly wary of whose interests are being represented in the public policy arena, especially in light of recent sensational scandals showing a cozy relationship between professional lobbyists and lawmakers, a crisis of confidence is engulfing many democratic societies across the european and north american continents. public perceptions of undue influence peddling, in which special interest groups exercise too much sway over government for self-serving purposes, have led to growing demands for the regulation of lobbyists and transparency of the policymaking process. the united states and canada have been struggling for decades to refine their systems of lobbyist regulation. of all the shortcomings of the north american model of lobbyist regulation – and there are many – transparency is not, for the most part, one of them. many european countries have also been experimenting with systems of lobbyist regulation. until recently, however, the european national experiments have produced very different results among themselves and in comparison with the north american counterparts. surprisingly, some of the earliest efforts to regulate lobbying occurred among new democratic countries in eastern europe rather than the more advanced industrial democracies of western europe. this observation stands in stark contrast to the north american experience, where lobbyist regulation emerged as an effort to manage a highly developed class of professional lobbyists within the strictures of long-standing democratic principles. the authors find that the answer to this anomaly lies in the fact that early european lobbyist regulations focused not on  transparency  as a means to regain public confidence in government, but on providing business interests with  access  to lawmakers as a means to bolster fledgling economies. this focus on access is quickly giving way to demands for transparency as many european governments, racked by scandal, are striving to salvage the public's trust. propelled largely by example from a reluctant european parliament and commission, which are themselves attempting to convince europe that a regional government is in its own interest, several european countries are beginning to make a transition from weak systems of lobbyist regulation, which emphasize business access, to strong systems of lobbyist regulation, which emphasize public transparency. in order to discern ‘best’ practices for achieving transparency through lobbying regulation, the authors first chart the regulatory systems of the united states and canada. that is followed by an analysis of all of the european lobbying regimes. the oft-expressed objection to this new trend toward transparency in europe – that professional lobbyists view such regulations as overly burdensome – is undercut by research on european and american lobbyists’ attitudes toward regulation, which are generally quite favorable. like everyone else, lobbyists realize that they have an image problem and that the best way to address that problem is by operating in the broad daylight of public transparency. finally, the authors offer recommendations on how to enhance transparency in policymaking, drawing from detailed comparisons of the north american and european models of lobbyist regulation.

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