Unit 3: Macroeconomics
Topic 3.6: Demand Management — Fiscal Policy Questions
Practice 20 exam-style questions for IB Economics Topic 3.6. Review the question stems below, then unlock the full Question Bank to access markschemes, model answers, and AI grading.
61 mark
An indirect tax such as VAT (value added tax) is:
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An indirect tax such as VAT (value added tax) is:
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One limitation of using fiscal policy to manage the economy is:
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Explain the difference between a progressive and a regressive tax.
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Using the multiplier formula, calculate and explain the effect of a $20 billion increase in government spending if the MPC is 0.75.
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Explain the difference between a progressive and a regressive tax.
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Distinguish between a budget deficit and the national debt.
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National debt is different from a budget deficit in that:
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Distinguish between direct and indirect taxation, giving an example of each.
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Explain the multiplier effect using an example of government spending.
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Contractionary fiscal policy is most appropriate when:
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If the marginal propensity to consume is 0.8, the value of the multiplier is:
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A leakage (withdrawal) from the circular flow that reduces the multiplier effect is:
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