ECS 1601

Study Unit 3 Quiz

Multiple Choice Questions (MCQs)

1.

2.

3.

Which of the following statements are incorrect?

[1]

An example of an Ad Valorem tax is VAT

[2]

A tax is regressive if tax paid decreases as taxable income increases

[3]

Direct taxes are paid when individuals purchase goods and services

[4]

A specific tax is levied in each unit of the product

Inflationary financing is when government

[1]

issues government bonds in an attempt to finance its debts

[2]

borrows from the central bank by using its overdraft facilities

[3]

borrows money in the international capital market

[4]

borrows money in the domestic capital market

Which of the following statements are incorrect?

[1]

Government borrowing increases public debt

[2]

Budget deficit is the difference between government spending and current revenue

[3]

Government will implement expansionary fiscal policy when the economy is in a

recession

[4]

The redistribution of income refers to a process whereby everyones incomes are

redistributed equally among the population

4.

5.

A tax is proportional if
[1]

The tax paid increases as the taxable income increases

[2]

The tax paid decreases as the taxable income decreases

[3]

The tax paid remains the same if the taxable income decreases

[4]

The tax paid decreases as the taxable income increases

A specific excise tax is

[1]

A tax that is levied on specific goods only

[2]

A fixed amount that is levied on each unit of the product

[3]

A tax that is levied as a percentage of the value of the product

[4]

A tax that is levied on specific individuals depending on their income

Quiz will be discussed on your e-tutor site from Monday 24 February

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ECS 1601
Study Unit 3 Quiz

Long Questions
6.

Define the following concepts

6.1.

Public private partnership

6.2.

Privatisation

6.3.

Nationalisation

6.4.

Commercialisation/corporatisation

6.5.

Fiscal policy

7.

Discuss 3 advantages and 3 disadvantages of privatisation

8.

Name and discuss the criteria for good tax.

9.

Name one difference between tax avoidance and tax evasion.

10.

How would government make use of tax as an instrument of restrictive fiscal policy and how
would this affect consumer spending?

Quiz will be discussed on your e-tutor site from Monday 24 February

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