Jack works for the state government. The state is concerned because the receipts from sales taxes are much lower than the projections, even though the projections of population, salaries, and unemployment have been right on target. Jack does a detailed study and finds that much of the underestimation of sales tax revenue is most likely due to ________.

Question

Quizplus · Accepted Answer

Increased lateral cycling in an underground economy refers to increased transactions that are not reported to the government, which would result in a decrease in sales tax revenue. This would explain why the projections for population, salaries, and unemployment were on target but the receipts from sales taxes are lower than expected. The other choices, such as a general decrease in prices, increased product disposal rates, and increased product quality, would not have as much of an impact on sales tax revenue.

Jack Works for the State Government