2.5.1 Government Taxation Economics

What is the primary purpose of government setting taxes?

• To regulate businesses

• To collect tax revenue

• To control imports

• To subsidize exports

Which type of tax is levied on individual earnings?

• Excise tax

• Income tax

• Corporate tax

• Sales tax

Which tax affects limited companies directly?

• Property tax

• Corporation tax

• Income tax

• Sales tax

What type of tax is VAT considered?

• Personal tax

• Export tax

• Business tax

• Spending tax

Which tax is directly paid by sole traders or partnerships?

• Corporate tax

• Service tax

• Income tax

• Sales tax

What is the effect of increased income tax on consumer behavior?

• Increased savings

• Higher spending on luxury

• Less disposable income

• More investments

How does an increase in business taxes affect a company's profits?

• Decreases profits

• Stabilizes profits

• Increases profits

• Decreases costs

What is the impact of higher corporation tax on a company's reinvestment capabilities?

• Only affects small businesses

• No impact on reinvestment

• Decreases reinvestment

• Increases reinvestment

What happens to the demand for a product if the spending tax on it increases?

• Demand remains stable

• Demand increases

• Demand fluctuates

• Demand decreases

What results from increased spending taxes on businesses?

• Increased export rates

• Lower product prices

• Higher product prices

• More competitive markets