ROLE OF GOVERNMENT

Economic functions of the government are all the following EXCEPT to ___________.

• control the price level of public goods

• create a stable economic environment

• to increase the level of education

• distribute income and wealth

Inflation will ________ the purchasing power of _________.

• increase; consumers

• reduce; consumers

• maintain; consumers

• maintain; sellers

A deficit budget occurs when ____________.

• the public debt decreases

• the government's total expenditure equals revenue

• tax collection is more than government expenditure

• the government's total expenditure exceeds revenue

During an economic recession, the government will experience a budget deficit when tax collections decline due to ____________.

• an increase in the price level

• higher unemployment rate

• a polluted environment

• income reduction

Which of the following is a government operating expenditure?

• defence and security

• pensions and gratuities

• economic services

• social services

Petroleum income tax and stamp duties are two examples of government revenue. Revenue falls under ______.

• direct taxes

• indirect taxes

• non-tax revenue

• non-revenue receipts

Chu pays a tax of RM300 on his income of RM60,000, while Wahidah pays a tax of RM120 on her income of RM40,000. This tax structure is _______.

• regressive

• progressive

• proportional

A tax rate which goes on increasing with income is a(an) _________ tax.

• progressive

• proportional

• regressive

Taxes are divided into three structures based on the _______.

• amount of income

• percentage of tax

• income level

• rate of taxation

The tax rate of proportional tax remains constant even if income ______.

• increases

• decreases

• remain constant

• increases or decreases