Economics 2281 · O Level · Fiscal policy

Fiscal policy — practice question

A government chooses to alter two of its taxation policies. It cuts the petrol tax and increases the food tax. How will these changes influence how regressive the taxes are?

  • Alower petrol tax: less regressive; higher food tax: less regressive
  • Blower petrol tax: less regressive; higher food tax: more regressive
  • Clower petrol tax: more regressive; higher food tax: less regressive
  • Dlower petrol tax: more regressive; higher food tax: more regressive

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