If a Large Percentage of Economic Activity in Developing Countries

question 7

Multiple Choice

If a large percentage of economic activity in developing countries is unrecorded, then the countries are likely to rely on which of the following taxes to provide government revenue?

• A) Sales taxes
• B) Property taxes
• C) Income taxes
• D) Tariffs

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Definitions:

Short-Run Aggregate Supply Curve

A graphical representation showing the positive relationship between the total production of goods and services (aggregate supply) and the price level in the short term.

Expansionary Gap

A situation where the real GDP is higher than the potential GDP, often leading to inflationary pressures as demand outstrips supply.

Price Level

The collective median of current prices for goods and services in the economy.

Short-Run Aggregate Supply Curve

A curve that shows the relationship between the price level and the quantity of goods and services that firms are willing and able to supply in the short run.