Measuring Government Size
A common method used by economists to measure the size of government relative to the overall economy is to calculate total government tax revenue as a percentage of the Gross Domestic Product (GDP).
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Consider two hypothetical countries. Country A has a Gross Domestic Product (GDP) of $500 billion and total government tax revenue of $100 billion. Country B has a GDP of $2 trillion ($2,000 billion) and total government tax revenue of $300 billion. Based on the common economic method for measuring government size as a share of the economy, which of the following statements is accurate?
Critique of Government Size Measurement
Analyzing Government Size Trends
A country reports a Gross Domestic Product (GDP) of $2.5 trillion and total government tax revenue of $500 billion. Using the standard economic measure, the size of the government relative to the economy is ____%.