Name: ___________________ Grade: __________________ Date:_________

CA 1 Test : Unit 4.3 Fiscal Policy

Instruction: Carefully read each question and then circle the letter of the correct answer.

1. ____________________ are those taxes which burden the poor more than the rich.

a. Progressive taxes
b. Regressive taxes
c. Proportional taxes

2. ______________________ will stimulate growth, employment and help increase prices.

a. Expansionary fiscal policy

b. Contractionary fiscal policy
c. Fiscal policy

3. ____________________ are those taxes which burden the poor and rich equally.

a. Regressive taxes
b. Proportional taxes
c. Progressive taxes

4. ________________________ are taxes on goods and services sold.

a. Direct taxes
b. Indirect taxes
c. Income taxes

5. _____________________ is tax paid on a company’s profits.

a. Corporation tax
b. Income tax
c. Inheritance tax

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Instruction: Carefully read each question and then answer the questions by providing examples.

1. Define fiscal policy. (2 marks)

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2. What does it mean by the term “ budget surplus” ? (2 marks)

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3. What are the reasons for government spending ? (6 marks)

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4. What are the reasons for taxation ? (4 marks)

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5. What are the three tax systems ? (3 marks)

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