Y10 Economics - C26 Fiscal Policy

What does a balanced budget mean?

• The government spends more than it collects

• The government collects more than it spends

• The government manages to balance its revenues and spending

• The government has no budget at all

Which of the following is a reason for government spending?

• To promote private businesses

• To reduce government revenue

• To provide essential services

• To increase taxes

What is a tax?

• A government levy on income or expenditure

• A form of investment

• A type of government spending

• A government subsidy

Which type of tax is paid from the income of individuals?

• Indirect tax

• Sales tax

• Direct tax

• Value added tax

What is progressive taxation?

• A tax system that does not exist

• A tax system where higher earners pay a higher rate

• A tax system where everyone pays the same rate

• A tax system that charges lower rates for the wealthy

What does the principle of equity in taxation refer to?

• Taxes should be convenient to pay

• Taxes should be easy to collect

• Taxes should be based on the taxpayer's ability to pay

• Taxes should be flexible

How does taxation impact economic growth?

• It can boost domestic spending through tax cuts

• It always decreases economic growth

• It only affects inflation

• It has no effect on economic growth

What is fiscal policy?

• The use of interest rates to control inflation

• The use of taxes and government spending to affect macroeconomic aims

• The regulation of financial markets

• The management of public debt

What is expansionary fiscal policy used for?

• To control inflation

• To stimulate the economy

• To reduce government spending

• To increase taxes

Which of the following is a potential effect of high taxation?

• Encouragement of tax evasion

• Increased government revenue

• More business investments

• Higher consumer spending