Economy

Correct answer: A

It equals total cost divided by quantity.

Correct answer: B

I is correct: Marginal cost → Extra cost of one additional unit. It is the change in total cost divided by change in output. II is incorrect: Physical capital → Produced assets used in further production. Machinery is a typical example.

Correct answer: A

I is correct: Diseconomies of scale → Long-run average cost rises as scale expands. Coordination difficulties can raise unit cost. II is incorrect: Variable cost → Changes with production volume. Materials used generally rise with output.

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: Fiscal consolidation → Measures to improve the government's fiscal balance. It concerns deficits and debt sustainability rather than only one tax.

Correct answer: A

I is incorrect: Proportional tax → Tax rate remains constant as the base rises. The amount paid rises but the proportion does not. II is correct: Automatic stabiliser → Fiscal mechanism responding without a new discretionary decision. Income-linked taxes can soften cyclical fluctuations.

Correct answer: C

Tax revenue is a standard example.

Correct answer: D

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: Capital expenditure → Expenditure creating assets or reducing liabilities. Construction of a government asset is an example.

Correct answer: A

I is incorrect: Crowding out → Government borrowing reducing some private spending. It can occur through higher interest rates or resource competition. II is correct: Public debt → Outstanding government borrowing. It is a stock accumulated across periods.

Correct answer: C

A tax can have this incidence even with a uniform commodity rate.

Correct answer: C

I is incorrect: Proportional tax → Tax rate remains constant as the base rises. The amount paid rises but the proportion does not. II is correct: Subsidy → Government support lowering a recipient's cost or raising receipts. It can influence production or consumption incentives.

Correct answer: C

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: Automatic stabiliser → Fiscal mechanism responding without a new discretionary decision. Income-linked taxes can soften cyclical fluctuations.

Correct answer: A

Current administrative spending is a common example.

Correct answer: B

I is correct: Public debt → Outstanding government borrowing. It is a stock accumulated across periods. II is correct: Fiscal consolidation → Measures to improve the government's fiscal balance. It concerns deficits and debt sustainability rather than only one tax.

Correct answer: A

It can occur through higher interest rates or resource competition.

Correct answer: C

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: Regressive burden → Lower-income persons pay a greater share of income. A tax can have this incidence even with a uniform commodity rate.

Correct answer: B

Income-linked taxes can soften cyclical fluctuations.

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.

Correct answer: A

It is a stock accumulated across periods.

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.

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.

Correct answer: B

It can differ from who legally remits the tax.

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.

Correct answer: A

Construction of a government asset is an example.

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.

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.