Taxation

Question 1

3 reasons for taxation

Answer 1

To correct market failure

As a macroeconomic policy tool

Redistributive income

Question 2

What does expansionary do to GDP

Answer 2

Increase it

Question 3

What does Contractionary do to GDP ?

Answer 3

Decrease it

Question 4

3 arguments in favour of indirect tax

Answer 4

Reduce market failure

Don’t dicenticuse work

Changed more easily

Question 5

3 argument in favour of direct tax

Answer 5

Indirect is more inflationary

DT is more progressive , IT more regressive

IT leads to black market

Question 6

What does direct tax shift ?

Answer 6

AD

Question 7

What does indirect tax shift ?

Answer 7

SRAS , affects c.o.p

Question 8

What type of tax is national insurance

Answer 8

Direct tax

Question 9

Councils tax

Answer 9

Direct tax
Shifts AD
Impacts consumption

Question 10

Business rates

Answer 10

Indirect tax

Question 11

V . A . T

Answer 11

Indirect tax
Shifts SRAS

Question 12

Corporation tax

Answer 12

Direct tax
Influences AD
Via investment

Question 13

Tax evasion

Answer 13

Illegal , concealing income from HMRC

Question 14

Tax avoidance

Answer 14

Legal , finding ways to reduce how much tax you owe

Question 15

Indirect taxes

Answer 15

V A T
Business rates

Question 16

Direct taxes

Answer 16

National insurance

Council tax

Corporation tax