fiscal policy

Question 1

Fiscal policy:

Answer 1

Fiscal policy: fiscal policy involves deliberate changes in either government spending or taxation.

Question 2

Direct tax:

Answer 2

Direct tax: a tax that cannot be passed on to another person and is usually levied on incomes.

Question 3

Indirect tax:

Answer 3

Indirect tax: a tax on spending. It is termed indirect because the seller can pass on the tax to the buyer, i.e. the seller can avoid the tax by increasing the selling price, though the tax cannot always be passed on in full.

Question 4

Progressive taxes:

Answer 4

Progressive taxes: where those on higher incomes pay a higher proportion of their income in tax compared with those on lower incomes.

Question 5

Regressive taxes:

Answer 5

Regressive taxes: taxes that increase in relative size on lower income earners.

Question 6

Proportional taxes:

Answer 6

Proportional taxes: taxes that are paid in equal proportions by everyone.