2 marksThe UK Government is planning to cut the rate of corporation tax on all pre-tax profits of companies to 17% by 2020.
If a company makes £500 000 pre-tax profit in 2020, calculate how much corporation tax it will pay. Assume that the government cuts the rate of corporation tax as planned.
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2 marksThe UK Government is planning to cut the rate of corporation tax on all pre-tax profits of companies to 17% by 2020.
Explain one possible reason why the revenue from corporation tax could increase if the government cuts the rate of tax.
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2 marksThe UK has experienced a budget deficit since 2001. The government aimed to reach a budget surplus by 2019, but in 2016 this target was abandoned.
(Source: adapted from https://www.gov.uk/government/news/autumn- statement-2016-some-of-the-things-weve-announced)
Explain one likely reason why the 2019 budget surplus target was abandoned.
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2 marksThe UK has experienced a budget deficit since 2001. The government aimed to reach a budget surplus by 2019, but in 2016 this target was abandoned.
(Source: adapted from https://www.gov.uk/government/news/autumn- statement-2016-some-of-the-things-weve-announced)
Explain the likely impact of abandoning the budget surplus target on the UK national debt.
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1 markThe UK has experienced a budget deficit since 2001. The government aimed to reach a budget surplus by 2019, but in 2016 this target was abandoned.
(Source: adapted from https://www.gov.uk/government/news/autumn- statement-2016-some-of-the-things-weve-announced)
If a government takes decisions to target a budget surplus, this is an example of:
contractionary monetary policy
discretionary fiscal policy
expansionary fiscal policy
expansionary monetary policy
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1 markWhich of the following best describes capital expenditure in government budgets?
Money spent on daily operational costs
Funds allocated for long-term investments
Payments made to individuals or businesses
Income generated through taxes
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1 markIf a government allocates funds for building a new school, in which category of expenditure would this be classified?
Capital expenditure
Current expenditure
Transfer payments
Revenue generation
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25 marksJapan’s budget deficit for 2017/18 is expected to be 4.6% of GDP. Its national debt is forecast to increase to above 250% of GDP by 2019.
Evaluate the impact of a large fiscal deficit and national debt on a country’s economy (25)
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12 marksRead Extract
With reference to Extract A, discuss two macroeconomic policies, apart from protectionism, that a government could use to reduce the negative effects of globalisation (12)
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25 marksFigure 4: UK national debt as a percentage of GDP
Figure 5: UK fiscal deficit, public sector net borrowing (PSNB)
With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of a government policy of cutting public expenditure rather than raising taxes as a means of reducing a fiscal deficit.
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25 marksRefer Extract
With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of policies that could be used to stimulate economic growth and development in Chile.
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10 marksAssess the view that ‘some level of inequality is desirable to maintain an appropriate incentive structure in the economy’ (Extract B, lines 19 and 20) (10 marks)
Read Extract
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8 marksExamine two reasons why the Turkish government may want to avoid a significant fall in the exchange rate of the Turkish lira.
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8 marksWith reference to Figures 4 and 5 and your own knowledge, examine the relationship between the national debt as a proportion of GDP and the fiscal deficit.
Figure 4: UK national debt as a percentage of GDP
Figure 5: UK fiscal deficit, public sector net borrowing (PSNB)
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