Government and the Economy

Question 1

limitations of the free market economy

Answer 1

unequal distribution of income/ negative externalities/may lead to monopoly power

Question 2

3 levels of government

Answer 2

federal/state/local

Question 3

federal government

Answer 3

exclusive powers to make laws affecting the country. responsible for taxes, social security, defence, health education, and culture

Question 4

state government

Answer 4

concurrent and residual powers to make laws affecting the state inc. public transport, education, health and housing

Question 5

local government

Answer 5

makes laws over local responsibilities, including garbage collection, local roads and streets, regulation and licensing, and sporting facilities

Question 6

exclusive powers

Answer 6

only the federal power has exclusive powers and they include the power to make laws over national matters

Question 7

concurrent powers

Answer 7

shared by federal and state

Question 8

residual powers

Answer 8

exercised by state and also delegated to local governments

Question 9

progressive tax rates

Answer 9

the tax rate increases as taxable value increases

Question 10

regressive tax rates

Answer 10

the amount of tax you pay as a percentage of your income decreases the more income you earn

Question 11

proportional tax rates

Answer 11

the tax rate is fixed for all profit levels

Question 12

fiscal policy

Answer 12

can be used to stabilise the economy - budget for surplus or deficit

Question 13

monetary policy

Answer 13

set by the RBA through the cash rate

Question 14

federal budget

Answer 14

an estimate of commonwealth revenue and expenditure for the forthcoming fiscal year

Question 15

main forms of revenue for the government

Answer 15

taxes - individual income tax, company tax, gst

Question 16

main expenses for the federal government

Answer 16

social security and welfare, health, education and defence