The Italian government collects a smaller amount of the taxes it is owed than the U.S.government.Other things being equal,
A)U.S.and Italian GDP should be equal.
B)U.S.GDP should be higher than Italian GDP.
C)U.S.GDP should be lower than Italian GDP.
D)U.S.residents are better off than Italian residents.

Question

Quizplus · Accepted Answer

The amount of taxes collected by a government is related to its ability to provide public goods and services, which in turn can impact the economy. If the Italian government collects a smaller amount of taxes than the U.S. government, it suggests that the Italian government may have less ability to provide public goods and services. This could ultimately impact the overall productivity and growth of the Italian economy and therefore, the GDP. Therefore, U.S. GDP should be higher than Italian GDP.

The Italian Government Collects a Smaller Amount of the Taxes