Step 1: Understanding the Laffer Curve
The Laffer Curve is an economic theory that shows how government tax revenue changes as tax rates change. It suggests there is an optimal tax rate that maximizes revenue.
Step 2: Explanation
- At 0% tax rate, revenue is zero.
- At 100% tax rate, revenue is also zero because no one would work or declare income.
- Somewhere between 0% and 100%, the government collects maximum revenue. This relationship is shown by the Laffer curve.
Step 3: Other options
- Option (A) describes the Phillips curve, not Laffer.
- Option (C) describes the Environmental Kuznets curve.
- Option (D) refers to income inequality concepts.
Thus, Option (B) is correct.