In developing countries, the government's revenues are:
A)limited because the tax base is too large and the government lacks the institutional ability to collect taxes.
B)limited because even though the government can readily collect taxes, the tax base is too small.
C)limited because of the small tax base and the government's inability to collect taxes.
D)no more limited than in developed economies.

Question

Quizplus · Accepted Answer

C is correct because in developing countries, the government's revenues are often constrained by both a small tax base (due to lower incomes and less economic activity) and challenges in tax collection, such as lack of infrastructure and institutional capacity.

In Developing Countries, the Government's Revenues Are