Virtually any tax will yield Blank______ tax revenue as GDP rises.

Question

Multiple choice question.

increasing, at a decreasing rate

decreasing, at an increasing rate

increasing

decreasing

increasing, at an increasing rate

Answer 1

The correct answer is increasing, at a decreasing rate.

As GDP rises, tax revenue typically increases along with it, but often the rate of increase in tax revenue slows down due to diminishing returns on taxation.