4.3 - Government intervention in microeconomics - Indirect taxes

Question 1

Indirect taxes

Answer 1

Imposed on the spending to buy.

Question 2

What does indirect mean with reference to indirect taxes?

Answer 2

Indirect refers to the fact that the tax is paid partly by consumers and partly by producers.

Question 3

Excise taxes

Answer 3

Taxes on specific goods and services.

Question 4

Indirect taxes and their effect on allocation of resources.

Answer 4

This is because prices act as signals and incentives determining the allocation of resources, and as a result of indirect taxes prices do change.

Question 5

4 Reasons why governments impose taxes

Answer 5

-A source of government revenue
-Method of discouraging the consumption of harmful products