In a country with unusually high tax rates, one might expect that ________
A) GDP might be overstated because the government might avoid running surpluses
B) GDP might be understated because its citizens might avoid reporting some of their income
C) GDP might be overstated because the government might raise its outlays
D) GDP might be understated because its citizens might flee the country
E) after tax income should be much higher than that of countries with lower tax rates
B
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
Capital is a factor of production. An example of capital as a factor of production is
A) machines. B) education. C) stocks. D) money. E) bonds.
The fundamental economic problem is: a. poverty
b. unemployment. c. scarcity. d. inflation.
When firms are said to be price takers, it implies that if a firm raises its price,
a. buyers will go elsewhere. b. buyers will pay the higher price in the short run. c. competitors will also raise their prices. d. firms in the industry will exercise market power.