Economics Paper 24

1

The diagram that shows the mone y received and paid out by each sector of the economy is the






2

A government’s attempt to reduce its defence expenditure is an example of (i) , while a government effort to raise interest rates is an example of (ii) . (i) (ii)






3

According to the Laffer curve, as tax rates increase, tax revenues






4

The government imposes a new income tax legislation under which every male taxpayer must pay 15% of his income as taxes, while every female taxpayer must pay 20% of her income as taxes. Such tax legislation violates which equity principle?






5

A 15% VAT is a(n):






6

Tax incidence is the





7

You know that all taxes are distortionary. Under what conditions will this knowledge lead you to oppose the imposition of every single tax in the economy?






8

The automatic stabilisation function of fiscal policy ensures that government expenditures ______(i)______ and government revenues _____(ii)_____ during recessions.






9

Let us say assume the Pakistani government is facing a fiscal deficit. Which of the following would not constitute a possible method of financing this deficit?






10

Which of the following is not a correct argument against a fiscal policy expansion – say a tax cut – aimed at lifting aggregate demand?






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