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Economic effects of taxation

Total questions: 10

Worksheet time: 5mins

Name
Class
Date
1.

A steeply _________ taxation system tends to reduce income inequality.

a)

Regressive

b)

Proportional

c)

Progressive

d)

Digressive

2.

__________ taxation system increases inequality of income.

a)

Regressive

b)

Proportional

c)

Progressive

d)

Digressive

3.

Taxes imposed on luxury goods will have a/an __________ effect on income distribution.

a)

Neutral

b)

Favourable

c)

Unfavourable

d)

Zero

4.

Taxes imposed on necessary goods will have a/an ________ effect on income distribution.

a)

Neutral

b)

Favourable

c)

Unfavourable

d)

Zero

5.

Highly steep income tax has _________ effect on ability and willingness to work, save and invest.

a)

Neutral

b)

Favorable

c)

Zero

d)

Unfavourable

6.

When money burden of indirect taxes are passed on to the consumer it ________ the consumers real income.

a)

Increases

b)

Reduces

c)

Neutralizes

d)

May increase or reduce

7.

The loss of consumer utility from substituting taxed goods by untaxed or low-taxed good refers to

a)

Welfare cost

b)

Consumer surplus

c)

Deadweight loss

d)

Opportunity cost

8.

During depression taxes are _______.

a)

Raised

b)

Lowered

c)

Kept unchanged

d)

Either raised or kept unchanged

9.

People's ability to work, save and invest will suffer when ________ goods are taxed.

a)

Luxury

b)

Comfort

c)

Branded

d)

Necessary

10.

High tax on ______ will have favourable effect on ability to work.

a)

Necessary goods

b)

Giffen goods

c)

Addictive goods

d)

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