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,Expect view tutors Ecs16101 Assignment 02
Due date: 30 July distinction guaranteed
, Started on Tuesday, 23 July 2024, 8:00 PM
State Finished
Completed on Tuesday, 23 July 2024, 8:33 PM
Time taken 33 mins 1 sec
Grade 17.00 out of 18.00 (97.33%)
Question 1 If the government intends making use of a contractionary fiscal policy, it should …
Complete
Mark 1.00 out of a. decrease taxes and increase government spending.
1.00
b. decrease taxes and decrease government spending.
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question c. increase the interest rate.
d. increase taxes and decrease government spending.
Question 2 Which one of the following statements regarding government spending and the financing of such spending is incorrect?
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Mark 1.00 out of a. Government spending can be financed through taxation and borrowing.
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b. The difference between government spending and taxation is called the budget deficit.
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question c. Personal income tax is the only source of revenue that can be used to finance government spending.
d. The income received from state-owned enterprises forms part the sources of revenue for government.
Question 3 Which one of the following statements on nationalisation and privatisation is correct?
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Mark 1.00 out of a. Nationalisation is the transfer of ownership from the public sector to the private sector.
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b. Privatisation is the transfer of ownership from private enterprise to government.
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question c. One of the arguments in favour of privatisation is that the privatised firm may attract direct foreign investment.
d. Commercialisation the same as privatisation.
Question 4 If the government decides to increase value-added tax (VAT) from 15 to 16%, what impact would this have on consumers?
Complete
Mark 1.00 out of a. A higher VAT rate will make households with the lowest incomes worse off.
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b. An increase in the VAT rate does not affect consumers’ decisions to save and invest.
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question c. Tax revenue generated from an increase in VAT will also increase spending on public healthcare.
d. VAT will only affect producers and not consumers.
, Question 5 The following table gives the tax rates for individuals for the 2016 tax year:
Complete
Mark 1.00 out of 2016 tax year (1 March 2015 - 29 February 2016)
1.00 Taxable income (R) Rates of tax (R)
Flag 0 - 181 900 18% of each R1
question
181 901 - 284 100 32 742 + 26% of the amount above 181 900
284 101 - 393 200 59 314 + 31% of the amount above 284 100
393 201 - 550 100 93 135 + 36% of the amount above 393 200
550 101 - 701 300 149 619 + 39% of the amount above 550 100
701 301 and above 208 587 + 41% of the amount above 701 300
If the government decides to increase the tax rate for those earning more than R701 300 from R208 587 + 41% of the amount above R701
300 to R208 587 + 43%, it implies that it has increased the … for high-income groups, which is an example of …
a. minimum tax amount; vertical equity.
b. capital gains tax; value added tax.
c. marginal tax rate; horizontal equity.
d. marginal tax rate; vertical equity.
See section 3.6 of the textbook. The change from 41% to 43% is a change in the marginal tax rate, since it increases the percentage tax you
must pay on income above a certain threshold (R701 301). Since this is an increase for high income earners, we are dealing here with
vertical equity meaning that those who are more able to pay taxes should contribute more than those less able to pay tax. Horizontal equity
means that individuals with the same income should pay the same amount in taxes.
Question 6 An indirect tax such as value-added tax is regressive since …
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Mark 1.00 out of a. poor people pay a higher amount of taxes while rich people pay a lower amount of taxes.
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b. rich people pay a higher amount of taxes while poor people pay a lower amount of taxes.
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question c. the percentage of income, which rich people pay towards taxes, is less than the percentage of income that poor people pay
towards taxes.
d. the percentage of income, which rich people pay towards taxes, is more than the percentage of income that poor people pay
towards taxes.
See section 3.6 of the textbook. A tax is regressive if the ratio between tax paid and taxable income decreases as taxable income increases.
In the case of value-added tax, the percentage of income that rich people pay towards taxes is less than the percentage of income that poor
people pay towards taxes. It is therefore a regressive tax. Note that it is about the percentage of their income that they pay in tax and not
the amount of tax they pay.
Question 7 A tax is
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Mark 0.00 out of a.
1.00 proportional when tax is levied on goods and services at the same standard rate.
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question
b. regressive when everybody pays the same amount of tax.
c.
proportional when everybody pays the same amount of tax.
d. regressive when all taxpayers pay the same rate.
Your answer is incorrect.
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