Economics 9708 · AS & A Level · Fiscal policy

Fiscal policy — practice question

(a)[8]

Explain the difference between a progressive direct tax and a regressive indirect tax, and give one example of each.

(b)[12]

Discuss whether an increase in direct taxes or an increase in interest rates is the more effective way of reducing inflation.

Worked solution & mark scheme

This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Knowledge: a direct tax is a levy on income and wealth (paid directly to the government).” …

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