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Chapter 7: Problem 20

Taxes (including federal, state, and local) are about _____ of our GDP. (LO5, 7) a) 10 percent b) 20 percent c) 30 percent d) 40 percent

Short Answer

Expert verified
The percentage of GDP represented by taxes, including federal, state, and local taxes, in the United States is approximately 30 percent (option c).

Step by step solution

01

Understand the concept of GDP and taxes

Gross Domestic Product (GDP) is the total market value of all goods and services produced within a country in a given period. It is an important economic indicator used to measure a country's economic performance. Taxes are compulsory contributions to the government, used to fund various public services and programs. There are different types of taxes, such as income tax, sales tax, and property tax. In this case, we need to find the combined percentage of federal, state, and local taxes as a part of the GDP.
02

Analyze the given options

We are given four options to choose from: a) 10 percent b) 20 percent c) 30 percent d) 40 percent To find the correct answer, we need to have an understanding of the general tax burden in relation to the GDP.
03

Choose the correct percentage

Based on the knowledge that the total tax burden (including federal, state, and local taxes) in most developed countries ranges between 25% and 45% of GDP, the most reasonable estimate for the United States would be: c) 30 percent According to various sources and data, the tax burden in the United States is around 30% of the GDP, which makes option c) the correct answer.

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Most popular questions from this chapter

Each of the following is a direct tax except the _____ tax. a) Social Security b) federal personal income c) corporate income d) federal excise

The most important source of federal tax revenue is the _____. a) personal income tax b) corporate income tax c) federal excise tax d) payroll tax

The most important source of local tax revenue is the _____ tax. (LOT) a) property b) income c) excise d) sales

The largest federal government purchase of final goods and services is _____. a) Social Security b) defense c) interest on the national debt d) foreign aid

Which is the most accurate statement about the federal personal income tax top MTR? (LOS) a) It has been higher than 90 percent. b) It is now the lowest it has ever been. c) It is nearly the highest it has ever been. d) It was at its highest in the 1980 s. e) It was at its lowest in the \(1950 \mathrm{~s}\).
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