5. The inflation tax is often used as a significant source of revenue in developing countries where the tax collection and reporting system is not well developed and tax evasion may be high. a. Use the numbers in the accompanying table to calculate the inflation tax in Canada and India (Rp = rupees). Inflation in Money supply in 2015 Central government receipts in 2015 2015 (billions) (billions) India 5.87% Rp24,581 Rp12,409 Canada 1.61% $787 $293 Data from: Statistics Canada; Controller General of Accounts (India); Reserve Bank of India; International Monetary Fund; The World Bank. b. How large is the inflation tax for the two countries when calculated as a percentage of government receipts?
5. The inflation tax is often used as a significant source of revenue in developing countries where the tax collection and reporting system is not well developed and tax evasion may be high. a. Use the numbers in the accompanying table to calculate the inflation tax in Canada and India (Rp = rupees). Inflation in Money supply in 2015 Central government receipts in 2015 2015 (billions) (billions) India 5.87% Rp24,581 Rp12,409 Canada 1.61% $787 $293 Data from: Statistics Canada; Controller General of Accounts (India); Reserve Bank of India; International Monetary Fund; The World Bank. b. How large is the inflation tax for the two countries when calculated as a percentage of government receipts?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:5. The inflation tax is often used as a significant source of revenue in developing countries where the tax
collection and reporting system is not well developed and tax evasion may be high.
a. Use the numbers in the accompanying table to calculate the inflation tax in Canada and India (Rp =
rupees).
Inflation in
Money supply in 2015
Central government receipts in 2015
2015
(billions)
(billions)
India
5.87%
Rp24,581
Rp12,409
Canada
1.61%
$787
$293
Data from: Statistics Canada; Controller General of Accounts (India); Reserve Bank of India;
International Monetary Fund; The World Bank.
b. How large is the inflation tax for the two countries when calculated as a percentage of government
receipts?
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