Economics 0455 · IGCSE · Fiscal policy

Fiscal policy — practice question

A government reduces the income tax rate. What effect is this likely to have on tax evasion and revenue from indirect taxes?

  • Atax evasion: decrease; revenue from indirect taxes: increase
  • Btax evasion: decrease; revenue from indirect taxes: no effect
  • Ctax evasion: increase; revenue from indirect taxes: increase
  • Dtax evasion: increase; revenue from indirect taxes: no effect

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