Economics 9708 · AS & A Level · Fiscal policy
Using examples, explain how the marginal rate of taxation differs from the average rate of taxation, and consider whether a government should raise the rate of indirect tax in order to collect extra revenue.
Assess whether a balanced budget should always be one of the government's main macroeconomic objectives.
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “AO1 Knowledge and Understanding (max 3 marks): correct knowledge and understanding of marginal rate of tax (MRT) as the share of additional income paid in tax (1); correct knowledge and understanding of average rate of tax (ART) as the share of total income that is taxed (1); a correct example (which may be numerical/graphical) of each tax type (1).” …