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Gillespie: Foundations of Economics

Unit 26

Instructions

Choose your answers from a-d by clicking the radio button next to each choice and then press 'Submit' to get your score.

Question 1

An expansionist fiscal policy could include:

a) Lower interest rates

b) Increased lending by the banks

c) An increase in corporation tax

d) An increase in discretionary government spending

Question 2

If the economy grows the government's budget position will automatically:

a) Worsen

b) Improve

c) Stay the same

d) Increase with inflation

Question 3

Fiscal drag occurs when:

a) Tax bands do not increase with inflation

b) Tax rates move inversely with inflation

c) Government spending falls to reduce aggregate demand

d) Tax bands increase with inflation

Question 4

If the marginal rate of tax is 40% and consumers' income increase from £10,000 to £12,000:

a) The amount of tax paid will increase by £4,800

b) The amount of tax paid will increase by £4,000

c) The amount of tax paid will increase by £800

d) The total tax paid will be £4,800

Question 5

Imagine there is no tax on income up to £10000; after that, there is a tax of 50%. What is the average tax rate on an income of £20000?

a) £5000

b) 20%

c) 25%

d) £10,000

Question 6

The marginal rate of tax paid is:

a) The total tax paid / total income

b) Total income / total tax paid

c) Change in the tax paid / change in income

d) Change in income / change in tax paid

Question 7

In a regressive tax system:

a) The amount of tax paid increases with income

b) The marginal rate of tax decreases with more income

c) The average rate of tax falls as income increases

d) The average rate of tax is constant as income increases

Question 8

The Public Sector Net Cash Requirement (PSNCR) is:

a) A measure of the country's trade position

b) A measure of the country's budget position

c) A measure of the country's total debt

d) A measure of the government's monetary stance

Question 9

A government might use tax to:

a) Discourage consumption of positive externalities

b) Discourage consumption of public goods

c) Discourage consumption of merit goods

d) Discourage consumption of negative externalities

Question 10

As an economy grows:

a) The government's budget position should automatically improve

b) The government's budget position should automatically worsen

c) This will have no effect on the government's budget position

d) This will reduce the government's tax revenue

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Oxford University Press, Online Resource Centre, Unit 26.