Which of the following would an economist classify as a public good?
Health care
Public libraries
Seat belts in cars
Street lighting
The main aim of increasing taxes on alcoholic drinks is
To maximise government revenue
Eliminate alcohol consumption
Reduce alcohol consumption towards a socially efficient level
Reduce employment in the drinks industry
Which of the following is a direct tax
National insurance contributions
Value added tax
Excise duty on petrol
Car insurance tax
The distribution of income can be made more equal by
Abolishing all taxes
Introducing indirect taxes on all goods and services
Introducing progressive taxation
Introducing proportional taxation
A budget deficit
Means that imports are greater than exports
Will lead to an increase in the National Debt
Will facilitate a fall in interest rates
Will help to reduce aggregate demand
If the Chancellor raised the income tax allowance by £500 leaving the basic rate at 20%, what would the effect on annual disposable income be?
Raise it by £200
Raise it by £100
Lower it by £100
Leave it unchanged
A government faces falling tax revenues and rising benefit payments. This is likely to be due to
Faster economic growth
Rising export earnings
Higher unemployment
Increased inflation
Stuart earns £20,000 per year and pays £4,000 in income tax. Steve earns £30,000 and pays £8,000 in income tax. Sylvie earns £10,000 and pays £1,500 in tax. The income tax system is
Regressive
Proportional
Progressive
Flat rate
A switch from direct to indirect taxation in the UK would be likely to
Lead to an immediate fall in the rate of inflation
Reduce the incentive to work
Lead to a rise in interest rates
Cause a change in the pattern of demand for goods and services
If an economy moves into an unexpected recession and the government has already planned a budget deficit, planned tax revenues will
Rise, thus lowering the budget deficit
Remain unchanged
Fall, thus lowering the budget deficit
Fall, thus increasing the budget deficit
A regressive tax is defined as one which requires
All taxpayers to pay the same absolute amount of their income in taxation
High income earners to pay more in tax than low income earners
High income earners to pay a lower proportion of their income in taxes than low income consumers
High income earners to pay a higher proportion of their income in taxes than low income earners
A decision by the government to introduce an expansionary fiscal policy would be less likely to succeed in reducing unemployment if a country had
A high marginal propensity to import
A fixed exchange rate
A high level of cyclical unemployment and spare capacity
A low level of business and consumer confidence
Which of the following is not an automatic stabiliser of national income?
State retirement pensions
Social security contributions
Taxes on expenditure and income
Unemployment benefits
Indirect taxes may be preferred to direct taxes because they
will have little impact on the pattern of demand
they are less likely to distort the choice between work and leisure
will result in a more even distribution of income
are unlikely to raise the prices of goods and services
One problem with using fiscal policy to stabilize the economy is that
it is less powerful than monetary policy
policymakers do not have accurate information about the economy in advance
policymakers can use it to respond immediately to changes in economic conditions
the time lags between a change in fiscal policy and its impact on aggregate demand are shorter than for monetary policy
Suppose a drop in consumer and business confidence results in an economic recession. In order to move the economy out of the recession, an expansionary fiscal policy would include
an increase in direct and indirect taxation
an increase in the real value of welfare benefits
an expansion of the money supply
a depreciation of the exchange rate
Which of the following is NOT an example of fiscal policy
A reduction in government spending on training
The use of the exchange rate to control inflation
A planned increase in the government's budget deficit
Tax concessions given to businesses locating in regions of high unemployment
All other things being equal, a government would be undertaking a contractionary fiscal policy if it reduced
government expenditure
interest rates
taxation
the exchange rate
Which one of the following changes in fiscal policy is most likely to explain a rightward shift of an economy's aggregate demand curve?