Question

Why do you suppose that there is a positive relationship between nations' tax rates and the relative size of their underground economies?

Short answer

The general size of the tax rate is the primary justification for the underground economy. hence there is a positive relationship between nations' tax rates and the relative size of their underground economies.

Step-by-step solution

introduction

The underground economy is one which the nations need to stay away from. Families which produce labour and products for their own purposes are specialists of the casual economy and not unlawful specialists.

explanation

The general size of the tax rate is the primary justification for the underground economy.

An expansion in the size of the underground economy can prompt low government incomes which thusly, can lessen the amount and nature of the government's labour and products. A further developed and better open assistance can decrease the size of the underground economy. One more justification behind underground economic exercises is the expanded power of unofficial law; it can essentially decrease the opportunity of individuals so they go with their decision to underground economies.