Most of the taxes collected by governments tend to
A)remain fixed.
B)move in the opposite direction from GDP.
C)be sales taxes.
D)rise and fall with the level of GDP.

Question

Quizplus · Accepted Answer

Taxes tend to rise and fall with the level of GDP. When the economy is performing well, people tend to earn more money and spend more, which results in higher tax collections. On the other hand, during economic downturns, people tend to earn less and spend less, which results in lower tax collections. Therefore, tax collections tend to have a direct correlation with the level of GDP.

Most of the Taxes Collected by Governments Tend to