For Automatic stabiliser, identify the accounting or policy meaning.
Correct answer: B
Income-linked taxes can soften cyclical fluctuations.
Economy
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Evaluate the two proposed answers. Which are supported? I. Disinvestment — the accounting or policy meaning: Fiscal mechanism responding without a new discretionary decision. II. Capital expenditure — the accounting or policy meaning: Expenditure creating assets or reducing liabilities.
Correct answer: D
I is incorrect: Disinvestment → Sale of government ownership in an enterprise. It changes the government's asset holdings. II is correct: Capital expenditure → Expenditure creating assets or reducing liabilities. Construction of a government asset is an example.
For Public debt, identify the accounting or policy meaning.
Correct answer: A
It is a stock accumulated across periods.
Evaluate the two proposed answers. Which are supported? I. Regressive burden — the accounting or policy meaning: Who ultimately bears a tax's economic burden. II. Subsidy — the accounting or policy meaning: Government support lowering a recipient's cost or raising receipts.
Correct answer: B
I is incorrect: Regressive burden → Lower-income persons pay a greater share of income. A tax can have this incidence even with a uniform commodity rate. II is correct: Subsidy → Government support lowering a recipient's cost or raising receipts. It can influence production or consumption incentives.
Evaluate the two proposed answers. Which are supported? I. Revenue receipt — the accounting or policy meaning: Government receipt that does not create a liability or reduce an asset. II. Fiscal consolidation — the accounting or policy meaning: Measures to improve the government's fiscal balance.
Correct answer: C
I is correct: Revenue receipt → Government receipt that does not create a liability or reduce an asset. Tax revenue is a standard example. II is correct: Fiscal consolidation → Measures to improve the government's fiscal balance. It concerns deficits and debt sustainability rather than only one tax.
For Tax incidence, identify the accounting or policy meaning.
Correct answer: B
It can differ from who legally remits the tax.
Evaluate the two proposed answers. Which are supported? I. Automatic stabiliser — the accounting or policy meaning: Government borrowing reducing some private spending. II. Regressive burden — the accounting or policy meaning: Lower-income persons pay a greater share of income.
Correct answer: C
I is incorrect: Automatic stabiliser → Fiscal mechanism responding without a new discretionary decision. Income-linked taxes can soften cyclical fluctuations. II is correct: Regressive burden → Lower-income persons pay a greater share of income. A tax can have this incidence even with a uniform commodity rate.
For Capital expenditure, identify the accounting or policy meaning.
Correct answer: A
Construction of a government asset is an example.
Evaluate the two proposed answers. Which are supported? I. Progressive tax — the accounting or policy meaning: Average tax burden rises with the tax base. II. Subsidy — the accounting or policy meaning: Government support lowering a recipient's cost or raising receipts.
Correct answer: D
I is correct: Progressive tax → Average tax burden rises with the tax base. Higher-income persons pay a larger income share under a progressive income tax. II is correct: Subsidy → Government support lowering a recipient's cost or raising receipts. It can influence production or consumption incentives.
Evaluate the two proposed answers. Which are supported? I. Tax incidence — the accounting or policy meaning: Value or activity on which tax is assessed. II. Automatic stabiliser — the accounting or policy meaning: Fiscal mechanism responding without a new discretionary decision.
Correct answer: C
I is incorrect: Tax incidence → Who ultimately bears a tax's economic burden. It can differ from who legally remits the tax. II is correct: Automatic stabiliser → Fiscal mechanism responding without a new discretionary decision. Income-linked taxes can soften cyclical fluctuations.
For Disinvestment, identify the accounting or policy meaning.
Correct answer: A
It changes the government's asset holdings.
Evaluate the two proposed answers. Which are supported? I. Regressive burden — the accounting or policy meaning: Lower-income persons pay a greater share of income. II. Fiscal consolidation — the accounting or policy meaning: Measures to improve the government's fiscal balance.
Correct answer: B
I is correct: Regressive burden → Lower-income persons pay a greater share of income. A tax can have this incidence even with a uniform commodity rate. II is correct: Fiscal consolidation → Measures to improve the government's fiscal balance. It concerns deficits and debt sustainability rather than only one tax.
Evaluate the two proposed answers. Which are supported? I. Automatic stabiliser — the accounting or policy meaning: Government borrowing reducing some private spending. II. Crowding out — the accounting or policy meaning: Government borrowing reducing some private spending.
Correct answer: D
I is incorrect: Automatic stabiliser → Fiscal mechanism responding without a new discretionary decision. Income-linked taxes can soften cyclical fluctuations. II is correct: Crowding out → Government borrowing reducing some private spending. It can occur through higher interest rates or resource competition.
For Capital receipt, identify the accounting or policy meaning.
Correct answer: B
Borrowing and sale of assets are examples.
Evaluate the two proposed answers. Which are supported? I. Proportional tax — the accounting or policy meaning: Tax rate remains constant as the base rises. II. Tax base — the accounting or policy meaning: Value or activity on which tax is assessed.
Correct answer: A
I is correct: Proportional tax → Tax rate remains constant as the base rises. The amount paid rises but the proportion does not. II is correct: Tax base → Value or activity on which tax is assessed. The base and rate together determine the tax calculation.
For Subsidy, identify the accounting or policy meaning.
Correct answer: C
It can influence production or consumption incentives.
Evaluate the two proposed answers. Which are supported? I. Revenue receipt — the accounting or policy meaning: Government receipt that creates a liability or reduces an asset. II. Revenue expenditure — the accounting or policy meaning: Expenditure generally without creation of government assets.
Correct answer: B
I is incorrect: Revenue receipt → Government receipt that does not create a liability or reduce an asset. Tax revenue is a standard example. II is correct: Revenue expenditure → Expenditure generally without creation of government assets. Current administrative spending is a common example.
For Fiscal consolidation, identify the accounting or policy meaning.
Correct answer: A
It concerns deficits and debt sustainability rather than only one tax.
Evaluate the two proposed answers. Which are supported? I. Subsidy — the accounting or policy meaning: Government support lowering a recipient's cost or raising receipts. II. Public debt — the accounting or policy meaning: Outstanding government borrowing.
Correct answer: D
I is correct: Subsidy → Government support lowering a recipient's cost or raising receipts. It can influence production or consumption incentives. II is correct: Public debt → Outstanding government borrowing. It is a stock accumulated across periods.
For Progressive tax, identify the accounting or policy meaning.
Correct answer: C
Higher-income persons pay a larger income share under a progressive income tax.
Evaluate the two proposed answers. Which are supported? I. Capital receipt — the accounting or policy meaning: Government receipt that creates a liability or reduces an asset. II. Fiscal consolidation — the accounting or policy meaning: Measures to improve the government's fiscal balance.
Correct answer: D
I is correct: Capital receipt → Government receipt that creates a liability or reduces an asset. Borrowing and sale of assets are examples. II is correct: Fiscal consolidation → Measures to improve the government's fiscal balance. It concerns deficits and debt sustainability rather than only one tax.
For Proportional tax, identify the accounting or policy meaning.
Correct answer: B
The amount paid rises but the proportion does not.
Evaluate the two proposed answers. Which are supported? I. Subsidy — the accounting or policy meaning: Sale of government ownership in an enterprise. II. Disinvestment — the accounting or policy meaning: Sale of government ownership in an enterprise.
Correct answer: A
I is incorrect: Subsidy → Government support lowering a recipient's cost or raising receipts. It can influence production or consumption incentives. II is correct: Disinvestment → Sale of government ownership in an enterprise. It changes the government's asset holdings.
For Tax base, identify the accounting or policy meaning.
Correct answer: D
The base and rate together determine the tax calculation.
Evaluate the two proposed answers. Which are supported? I. Revenue receipt — the accounting or policy meaning: Government receipt that creates a liability or reduces an asset. II. Capital receipt — the accounting or policy meaning: Government receipt that creates a liability or reduces an asset.
Correct answer: A
I is incorrect: Revenue receipt → Government receipt that does not create a liability or reduce an asset. Tax revenue is a standard example. II is correct: Capital receipt → Government receipt that creates a liability or reduces an asset. Borrowing and sale of assets are examples.