(a)[2]
Define the term ‘a progressive tax’.
(b)[4]
Explain how direct and indirect taxes differ.
(c)[6]
Analyse how a drop in unemployment can raise tax revenue.
(d)[8]
Discuss whether a government ought to raise tax rates.
Economics 0455 · IGCSE · Fiscal policy
Fiscal policy — practice question
In Germany, tax revenue from direct and indirect taxes climbed to US$860 billion in 2013. This rise was mainly the result of lower unemployment. Germany uses a progressive tax system. In 2014, German politicians debated whether tax rates ought to be raised. Altering tax rates affects both the level of tax revenue collected and the type of tax system.
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