13. In developing countries, the government\'s revenues are: A. limited because

Question

13. 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. 14. The inflation tax is an: A. implicit tax on the holders of cash and the holders of assets specified in real terms. B. implicit tax on the holders of cash and the holders of assets specified in nominal terms. C. explicit tax on wealth. D. explicit tax on firms that raise their prices.

Explanation / Answer

13. The right answer is option c.

Explanation: In developing countries, the tax base is low because a substantial portion of the population earns less than the minimum income for taxation. Also, the government lacks institutional ability to identify and collect taxes from all people liable to pay taxes.

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