Y1 28

Question 1

Current spending

Answer 1

Day-to-day spending on public services maintenance or public services and paying public sector wages

Question 2

Capital spending

Answer 2

Government spending on infrastructure projects
Can be new or upgraded infrastructure projects

Question 3

Welfare spending

Answer 3

Government spending on benefits and pensions

Question 4

Debt and interest spending

Answer 4

Costs of governments of servicing debt interest does not increase A.D.
Non-productive form of government spending

Question 5

Reasons for government spending

Answer 5

Influence macro economy
Reduce income inequality
Correct market failure

Question 6

Indirect taxation

Answer 6

Expenditure taxes, levied on firms increasing their costs of production
Can be transferred to consumers paid when goods and services are sold
Specific indirect taxation and add Laurent taxation

Question 7

Specific indirect taxation

Answer 7

Tax per unit sold
Each unit has the same value of tax
Cigarette duty
Alcohol duty
Sugar duty
Fuel duty
Air Passenger duty

Question 8

Add valorant taxes

Answer 8

Percentage taxes
Tax as a percentage of the final price of goods or surface sold
VAT

Question 9

Direct tax

Answer 9

Taxis on income can’t be transferred to anyone
Income tax
Corporation tax

Question 10

Reasons for taxation

Answer 10

Raise government revenue
Influence macro economy
Reduce income inequality
Correct market failure

Question 11

Reasons for taxation
Influencing macroeconomy

Answer 11

Direct tax cuts can influence A.D.
In a recession, very helpful to boost growth and to reduce unemployment to bring inflation back up towards target rate to deflation
Higher taxation can call the economy down in a positive outlook gap situation or if inflation is too high and reduce AD
RAISING TAXES CAN ALSO BE VERY HELPFUL IN BRINGING THAT DOWN BUDGET DEFICIT AND THE NATIONAL DEBT PROMOTING MORE STABLE AND SUSTAINABLE GOVERNMENT FINANCES

Question 12

Reasons for taxation
Reduce income inequality

Answer 12

Helps to distribute income for increasing taxes on high income households in a progressive income tax system
Without help to lower the disposable income, the revenue earns can be used to maybe fund benefits or something to increase disposable income for those on lower incomes

Question 13

Reasons for taxation
Correcting market failure

Answer 13

Tax can also help to fight market failure
When there are over consumptions and overproduction taking place in direct tax can help to increase cost of production increasing prices and bring down consumption and over production and quantity back to the social optimum