Ch26-Ch27

What is meant by a regressive tax?

• a tax falls in line with inflation

• a tax reduces government revenue over time

• a tax places a greater burden on the poor than the rich

• a that that is replaced by one which generates more income

A government wants to redistribute income from the rich to the poor. Which changes in taxation would help it to achieve this objective?

• a cut in corporation tax and a rise in sales tax

• a cut in VAT and a rise in income tax

• a cut in capital gains tax and inheritance tax

• a rise in customs duties and excise duties

In which circumstance will the greatest amount of the tax be borne by the consumer?

• elastic PED & inelastic PES

• inelastic PED & inelastic PES

• inelastic PED & elastic PES

• elastic PED & inelastic PES

The following diagram shows the effect of introducing a tax. What is now the producer's revenue?

• OZXQ1

• OPAQ1

• OP1TQ1

• OPYQ

Define a progressive tax.

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Which one of the following is a monetary policy measure?

• a decrease in government regulations on labor markets

• a decrease in government spending on education

• an increase in the interest rate

• an increase in sales tax

What would increase MS?

• A decrease in consumer expenditure

• a decrease in investment

• an increase in bank lending

• an increase in the rate of interest

Which type of institution is responsible for conducting monetary policy?

• a central bank

• a commercial bank

• a multinaitonal company

• a trade union

Which of the following is most likely to increase demand in the economy?

• a reduction in government spending

• a reduction in interest rate

• a rise in budget surplus

• a rise in income tax

Define monetary policy

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