In 2019, the French government suggested a 3% levy on the revenue of large firms that market and sell goods online. This tax could cause income to be redistributed. There are worries that it could also cut France’s exports of services if the firms affected decide to relocate from France. However, the government expects supply-side policy measures to persuade these firms to remain in France.
(a)[2]
Define redistribution of income in words.
(b)[4]
Explain two reasons why a government may redistribute income.
(c)[6]
Analyse the economic effects of a fall in a country’s exports of services.
(d)[8]
Discuss whether supply-side policy measures will attract firms to operate in an economy.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Income being transferred from some individuals to others” …