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Between 1990 and 1992, UK citizens were charged a Community Charge commonly known as the poll tax – a single flat-rate per capita tax on every adult at a rate set by the local authority. What type of tax was this?
Progressive
Proportional
Indirect
Regressive
What does the Laffer Curve show?
Tax revenue will remain constant as the tax rate increases.
The correlation between the tax rate and tax revenue changes
There is a positive correlation between the tax rate and tax
There is a negative correlation between the tax rate and tax
Which of the following is the most likely explanation of what is shown in the diagram above?
A reduction in the interest rate
Research & development subsidies
An improvement in the availability and affordability of chil
An increase in the basic rate of income tax
If a country’s tax receipts are $520bn and government expenditure is $540bn, which of the following best describes the state of the macroeconomy?
Budget deficit
Current account surplus
Current account deficit
Budget surplus
The table below outlines the income tax rates in the UK in 2016–17. What is the average tax rate of an individual earning £46 500?
20%
16.8%
21.5%
40%
What can the government do to finance a budget deficit?
Devalue the exchange rate
Increase export subsidies
Reduce the money supply
Issue government bonds
Which of the following is an example of current expenditure by government?
Salaries of National Health Service employees.
Improvements to motorways to increase capacity.
Investment in additional offshore wind farms.
Construction of aircraft carriers.
Which of the following is an example of a fiscal policy?
A change in the level of government spending
A change in the rate of interest
A change in the exchange rate
A change in the money supply
Which of the following is an instrument of fiscal policy?
Quantitative easing
Regulation
Income tax
Interest rates
Which of the following is a direct tax in the UK?
Income tax
Council tax
Value added tax
Excise duty
UK government spending on the new high-speed railway line from London to Birmingham is likely, in the short run, to:
reduce the current account deficit
increase the budget deficit
reduce the budget deficit
increase the current account deficit
If government spending increases significantly during a recession, it may cause a:
current account surplus
cyclical budget deficit
capital account surplus
structural budget deficit
There is a sharp rise in unemployment in the economy. What will be the likely impact if automatic stabilisers already exist in the economy?
Aggregate demand will rise faster than it otherwise would
Aggregate supply will fall faster than it otherwise would
Aggregate demand will fall by less than it otherwise would
Aggregate demand will fall by more than it otherwise would
What is an example of an automatic stabiliser in response to a period of negative economic growth?
A decrease in the corporation tax rate
An in increase in the income tax-free personal allowance
An increase in expenditure on unemployment benefits
An increase in expenditure on education and training
Which of these would be the most effective in reducing expenditure on imports?
Reduced interest rates
Reduced research and development subsidies for UK firms
Increased indirect taxation
Increased government expenditure on welfare payments
Which of these types of government spending is an example of current expenditure?
Flood defence schemes
Construction of a new railway line
Universal credit
New hospital equipment
