The table shows a government’s receipts from taxation.
| $m | |
|
tax on company profits income tax import duties sales tax |
100 600 30 250 |
What is the total amount of revenue raised by direct taxes?
$280m
$700m
$730m
$950m
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What is an example of an expansionary fiscal policy?
decreased budget deficit
higher interest rates
increased money supply
reduced tax rates
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Which measure would indicate that an expansionary fiscal policy is being used by the government?
cuts in government spending
higher interest rates
lower interest rates
lower taxes
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A government decides to increase tax revenues from consumer expenditure.
Which tax will it increase?
capital gains tax
death duties
profits tax
value added tax
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Which form of taxation always takes an increasing percentage of the taxpayer’s income as it rises?
indirect
progressive
proportionate
regressive
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What is most likely to be an example of a progressive tax?
customs duties on imported goods
excise duties on cigarettes
income tax
sales tax
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The table shows the tax that an individual would pay at different levels of disposable income.
| disposable income ($) |
10 000 | 20 000 | 30 000 | 40 000 |
| tax ($) | 0 | 2000 | 4000 | 6000 |
Which type of tax is shown in the table?
corporation tax
indirect tax
progressive tax
regressive tax
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Which actions would be likely to increase government expenditure and reduce revenues from taxation?
| government expenditure | tax revenues | |
| A | improve health facilities for the elderly | encourage people to reduce their spending |
| B | increase the amount of the state pension | increase VAT (sales tax) |
| C | provide free bus transport for retired people | encourage people to work beyond retirement |
| D | raise the age of retirement | decrease bus fares |
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The table shows tax paid at different income levels in an economy.
| income level ($) |
tax paid ($) |
|
5 000 12 000 20 000 30 000 |
500 2400 5000 6000 |
Which description of the tax system used is correct?
continually progressive
progressive then regressive
proportional
regressive then progressive
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The table shows the amount of tax paid as income rises in four countries, A–D.
Which country has a progressive tax?
| amount of tax (US$) paid on income of: | |||||
| 10 000 | 20 000 | 30 000 | 40 000 | 50 000 | |
|
A B C D |
2 000 2 000 4 000 4 000 |
4 000 6 000 4 500 7 000 |
6 000 12 000 5 000 9 000 |
8 000 18 000 5 500 10 000 |
10 000 25 000 6 000 12 000 |
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The table shows the amount of tax to be paid at different weekly incomes.
| weekly income ($) | 100 | 150 | 200 | 250 |
| weekly tax ($) | 20 | 30 | 36 | 40 |
Which statement describes the system of income tax as income rises over this range?
It is progressive throughout.
It is proportional then becomes progressive.
It is proportional then becomes regressive.
It is regressive throughout.
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Why are indirect taxes, such as VAT of 20% on goods and services, described as regressive when comparing high-income and low-income purchasers?
High-income purchasers pay a higher percentage of their income in tax.
High-income purchasers pay a lower percentage of their income in tax.
Low-income purchasers pay a lower percentage of their income in tax.
Low-income purchasers and high-income purchasers pay the same percentage of their income in tax.
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Which policy would be most likely to reduce unemployment in the short run?
a programme of privatisation
a reduction in the standard rate of income tax
grants to firms to research new technology
removal of all restrictions on imports into the country
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A government decreased the tax on all goods produced in its country.
What is the most likely consequence of this?
a decrease in exports
an increase in imports
an increase in production
a worsening of the balance of trade in goods
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Due to a rise in the number of retired people, there has been increased demand for some government expenditure.
Which type of government expenditure is most likely to be directly affected?
defence
health services
re-training grants
street lighting
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An economy is experiencing rising prices.
Which government policy will help reduce consumer expenditure?
introducing compulsory saving for income earners
investing more in building infrastructure
issuing more banknotes and coins
reducing indirect taxes
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One aim of government policy is to redistribute income through taxation in order to reduce inequality.
Which policy will achieve this aim?
Impose a tax of $0.20 on every dollar earned.
Increase the tax-free allowances after which tax must be paid progressively.
Introduce a tax on all food.
Provide an incentive to earn by reducing taxes for the highest paid.
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The standard rate for Value Added Tax (sales tax) is 20% in a country. Different consumers buying the same product have to pay the same amount of tax.
What kind of tax is this?
direct
progressive
proportional
regressive
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What is a disadvantage of direct taxes?
They can be a disincentive to work.
They can be based on people’s ability to pay.
They can be a major source of tax revenue.
They can be progressive.
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When is a government said to balance its budget?
when all goods and services are taxed equally
when economic growth is the same in all regions of the economy
when its total income equals its total expenditure
when total exports equal total imports
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