Taxation

(a) With reference to Figure 1, explain the distinction between direct and indirect taxation.

(b) With reference to Extract A, examine two factors influencing the short‑run aggregate supply of the German economy.

(c) With reference to the information provided and your own knowledge, assess the likely macroeconomic effects of the German government’s budget deficit.

(d) With reference to Extract B, discuss the impact of the planned investment by Intel in a new semiconductor factory on Germany’s aggregate demand. Use an aggregate demand and aggregate supply diagram in your answer.

(e) Discuss supply‑side policies the German government could use ‘to improve its economic performance’ (Extract A, line 6).

With reference to Figure 1, explain the distinction between direct and indirect taxation.

With reference to Extract A, examine two factors influencing the short‑run aggregate supply of the German economy.

With reference to the information provided and your own knowledge, assess the likely macroeconomic effects of the German government’s budget deficit.

With reference to Extract B, discuss the impact of the planned investment by Intel in a new semiconductor factory on Germany’s aggregate demand. Use an aggregate demand and aggregate supply diagram in your answer.

Discuss supply‑side policies the German government could use ‘to improve its economic performance’ (Extract A, line 6).

With reference to Figure 4 and your own knowledge, explain the distinction between a progressive and a regressive tax.

With reference to Figure 4 and Extract A, examine the likely impact of the ‘freeze in income tax thresholds’ (Extract A line 1) on aggregate demand.

Assess whether a fiscal deficit and national debt should be a cause for concern for the UK government.

With reference to Extract B, discuss the use of quantitative easing in preventing deflation.

Discuss supply-side policies the UK government could introduce to stimulate economic growth.

Explain the difference between a positive and a normative statement, using an example of each from Extract A.

Examine two reasons for the rise in inflation in the UK. Refer to the information provided in your answer.

Discuss the likely impact of a rise in gas prices on a firm that uses a large amount of gas in its production process. Use a cost and revenue diagram to support your answer.

EITHER

Evaluate microeconomic and macroeconomic policies that could be used to reduce inequality in the UK.

Evaluate the likely microeconomic and macroeconomic effect of tax cuts in the UK.

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Using a Lorenz curve diagram, explain how income inequality is measured using the Gini coefficient. Refer to Extract A in your answer.

With reference to Figure 1 and Extract A, examine two likely causes of income inequality within the UK.

With reference to Figure 2, assess whether an increase in real income improves subjective happiness within the UK.

With reference to Extract C and your own knowledge, discuss methods the UK government could use to increase tax revenue.

With reference to Extract B, discuss the benefits of an increase in infrastructure spending on the UK economy. Use an aggregate demand and aggregate supply diagram to support your answer.

In 2018, the United States Government cut the corporation tax rate (tax on company profits) from 35% to 21%. Income tax rates for US citizens were also reduced: for example, the top rate of income tax was cut from 39.6% to 37%.

(Source adapted from: https://www.nytimes.com/)

Evaluate the likely impact of cutting tax rates as a policy to increase economic growth.

In 2018, the United States Government cut the corporation tax rate (tax on company profits) from 35% to 21%. Income tax rates for US citizens were also reduced: for example, the top rate of income tax was cut from 39.6% to 37%.

(Source adapted from: https://www.nytimes.com/)

Evaluate the likely impact of cutting tax rates as a policy to increase economic growth.

The UK Government is planning to cut the rate of corporation tax on all pre-tax profits of companies to 17% by 2020.

(Source: adapted from https://www.ft.com/content/ 7579f124-5742-11e7-9fed-c19e2700005f)

This would be an example of:

If a company makes £500 000 pre-tax profit in 2020, calculate how much corporation tax it will pay. Assume that the government cuts the rate of corporation tax as planned.

Explain one possible reason why the revenue from corporation tax could increase if the government cuts the rate of tax.

With reference to Extract D (line 18), explain the meaning of the term ‘output gap’. Use an aggregate demand and aggregate supply diagram in your answer.

With reference to Figures 4 and 5 and your own knowledge, examine the relationship between the national debt as a proportion of GDP and the fiscal deficit.

Discuss the likely impact of the National Living Wage on the profitability of firms. Use a cost and revenue diagram in your answer.

EITHER

With reference to the information provided and your own knowledge, evaluate the likely microeconomic and macroeconomic influences on the UK’s international competitiveness.

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of a government policy of cutting public expenditure rather than raising taxes as a means of reducing a fiscal deficit.

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