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Home  arrow Student Resources  arrow Chapter 19: Taxation  arrow Multiple choice questions

Multiple choice questions

Try the following multiple choice questions to test your knowledge of this chapter. Once you have answered the questions, click on 'Submit Answers for Grading' to get your results.

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This activity contains 15 questions.

Question 1.
Which two of the following are defined as sources of ‘customs and excise’ revenue?

a) Petroleum Revenue Tax
b) VAT
c) Inheritance Tax
d) Capital gains Tax
e) Fuel Duties

 
End of Question 1


Question 2.

Which two of the following are the most accurate indicators of the government’s budgetary situation (fiscal stance) in any given year?

a) Public Sector Net Cash Requirement
b) Public Sector Receipts
c) Income Tax Schedules
d) Public Sector Net Borrowing
e) Surplus on Current Account

 
End of Question 2


Question 3.

Which two of the following are often claimed to be the advantages of an indirect system of taxation?

a) It helps households to avoid the ‘unemployment trap’
b) It can be varied more quickly and easily
c) It imposes smaller administrative costs
d) It decreases the tax burden as a percentage of GDP
e) It stimulates government revenue when demand is elastic

 
End of Question 3


Question 4.

Which two of the following indicate the existence of a ‘poverty trap’?

a) Person on high income gains very little or even loses from an increase in gross earnings
b) Person on low income gains very little or even loses from an increase in gross earnings
c) As gross income rises, the value of extra benefit received outweighs any extra deductions from income tax
d) As gross income rises, the value of benefits received falls by more than any addition to the person’s income after deductions from income tax
e) The implicit marginal tax rate is close to zero

 
End of Question 4


Question 5.

Which two of the following are determinants of the ‘Council Tax’?

a) The number of individuals living in the property is more than two
b) The local ‘poundage’ rate
c) The average national property value
d) The Standard Spending Assessment (SSA)
e) The net income level of householders

 
End of Question 5


Question 6.
In the following five questions you will be given a description of a particular aspect of taxation. Which one of the expressions listed underneath most accurately fits the description?  
 
A tax system in which the marginal rate of taxation is higher than the average rate.

 
End of Question 6


Question 7.
Results in the ‘income method’ giving a smaller value for the National Income than the ‘expenditure method’.

 
End of Question 7


Question 8.
A person’s income when employed is less than when unemployed.

 
End of Question 8


Question 9.
A statistical relationship between tax revenue and tax rates which argues against ‘composite tax rates’ above 45%.

 
End of Question 9


Question 10.
In which circumstance would indifference curve analysis predict that a fall in income tax would increase incentives to work?

 
End of Question 10


Question 11.
Answer the following five questions either 'True' or 'False'.  
 
Taxes on expenditures (VAT and Customs and Excise) provide more tax receipts for government than taxes on incomes (Income Tax, Corporation Tax, Petroleum, Revenue Tax).

 
End of Question 11


Question 12.
UK direct taxes are progressive while indirect taxes are regressive.

 
End of Question 12


Question 13.
The UK is one of the most highly taxed countries in the developed world in terms of tax revenue as a percentage of GDP.

 
End of Question 13


Question 14.
The allocation of revenues from extra taxes to specific outcomes is known as ‘the regulator’.

 
End of Question 14


Question 15.
The large reduction in numbers of low income households facing implicit marginal tax rates of 100% suggests some progress in removing the ‘poverty trap’.

 
End of Question 15





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