WHSS Economics: Government Policies

What is the main reason why indirect tax is thought to be unfair?

A Not everyone pays an indirect tax.

B The consumer is unaware of the rate of tax.

C The retailer is forced to collect the tax for the government.

D The tax burden is greater for people on low incomes.

• A

• B

• C

• D

The government pays a subsidy for each worker employed by a firm in an area of high unemployment. When would this policy be most successful in reducing unemployment?

A when the firm is capital-intensive

B when the firm is labour-intensive, requiring mainly unskilled labour

C when the firm provides professional services

D when the firm requires mainly specialist, skilled labour

• A

• B

• C

• D

A country has different rates of income tax depending on the level of income earned. The highest rate of income tax is cut from 40% to 38%. From this statement it can be deduced that taxation will become:

A less indirect.

B less progressive.

C less regressive.

D more difficult to evade.

• A

• B

• C

• D

Economic growth can be defined as

A an increase in a country’s exports.

B an increase in a country’s population.

C an increase in the productive capacity of an economy.

D a reduction in inflation.

• A

• B

• C

• D

Instead of cleaning their own homes, a large number of households decide to clean each other’s homes and charge for their services. They all declare their income to the tax authority. What will increase as a result of this?

A Gross Domestic Product

B imports

C investment

D unemployment

• A

• B

• C

• D

In March 2000 the Ministry of Trade and Industry in Singapore stated that Gross Domestic Product grew by 5.4 % in the previous year. This produced higher revenues from taxation and resulted in a budget surplus. What may be concluded from this statement?

A The change in Gross Domestic Product was caused by a change in taxation.

B The government had increased the rate of taxation and the expenditure on its services.

C The national income of the country had increased and so more was paid in taxes.

D There had been economic growth because the government had reduced its expenditure and budgeted for a surplus.

• A

• B

• C

• D

The table shows the working population and value of production in four areas of a country. The government wants to encourage industrial development in the area with the lowest productivity. Which area will it select?

• A

• B

• C

• D

The graph shows the percentage of tax taken from different levels of income by four different taxes. Which illustrates a regressive tax?

• A

• B

• C

• D

What is most likely to conflict with a government's aim of price stability?

A higher direct tax rates

B higher government spending

C higher interest rates

D higher unemployment

• A

• B

• C

• D

The table shows some of Japan’s expenditure on social services (actual and projected) as a percentage of Gross Domestic Product. Which population group will benefit most from the projected changes?

A children below school age

B children of school age

C people over retirement age

D unemployed workers

• A

• B

• C

• D