Fiscal policy
4.2What the syllabus asks of you
- Government budget: definitions of: government budget; government budget deficit; government budget surplus
- Government budget: calculations of the size of a government budget deficit/surplus
- Reasons for government spending: main areas of government spending and the reasons for and effects of spending in these areas continued
- Taxation: reasons for taxation: raising revenue, discouraging consumption of demerit goods, reducing imports, redistributing income, influencing total demand, encouraging environmental sustainability
- Taxation: examples of the different classifications of tax: progressive, regressive, proportional; direct, indirect
- Taxation: impact of taxation on consumers, workers, producers/firms, the government and the economy
- Definition of fiscal policy
- Fiscal policy measures: changes in: taxes; government spending
- Effects of fiscal policy on government macroeconomic aims: how fiscal policy measures may enable a government to achieve its macroeconomic aims
Read the notes first
Chapter 4: Fiscal policy
Drill this topic
Every question on Fiscal policy, untimed, marked as you go.
Make a worksheet
Choose the years and how many questions, then print it with the answers on separate pages.
70 questions
1May / June 2026 · Paper 11 · Q19Show mark scheme →
ADirect tax revenue increases from year 1 to year 2.
BIndirect tax revenue decreases from year 1 to year 2.
CInheritance tax becomes more regressive from year 1 to year 2.
DTotal tax revenue stays the same from year 1 to year 2.
Mark scheme
2May / June 2026 · Paper 12 · Q19Show mark scheme →
Aindirect
Bprogressive
Cproportional
Dregressive
Mark scheme
3Oct / Nov 2025 · Paper 12 · Q18Show mark scheme →
A$30m
B$70m
C$100m
D$500m
Mark scheme
4Oct / Nov 2025 · Paper 12 · Q19Show mark scheme →
Achanges in interest rates and money supply
Bchanges in labour market policies to encourage more training
Cchanges in tax rates and government spending
Dchanges in the exchange rate
Mark scheme
5Oct / Nov 2025 · Paper 13 · Q19Show mark scheme →
Aanticipated tax revenue
Bchanges in exchange rates
Cforecast government borrowing
Dproposed government spending
Mark scheme
6May / June 2025 · Paper 11 · Q18Show mark scheme →
Aequality between social cost and social benefit
Bfairness between taxpayers
Cprofit maximisation by firms
Dtax revenue maximisation
Mark scheme
7May / June 2025 · Paper 12 · Q18Show mark scheme →
Aindirect
Bprogressive
Cproportional
Dregressive
Mark scheme
8May / June 2025 · Paper 12 · Q19Show mark scheme →
Aa rise in government borrowing
Ba rise in the level of exports
Ca rise in the national debt
Da rise in the rate of inflation
Mark scheme
9Oct / Nov 2024 · Paper 12 · Q22Show mark scheme →
Aa fall in the dependency ratio
Ba fall in the exchange rate
Can increase in cyclical unemployment
Dan increase in real GDP
Mark scheme
10Oct / Nov 2024 · Paper 13 · Q18Show mark scheme →
Aindirect
Bprogressive
Cproportional
Dregressive
Mark scheme
11Oct / Nov 2024 · Paper 13 · Q24Show mark scheme →
Adistribution of income: becomes less even; living standards: fall
Bdistribution of income: becomes less even; living standards: rise
Cdistribution of income: becomes more even; living standards: fall
Ddistribution of income: becomes more even; living standards: rise
Mark scheme
12May / June 2024 · Paper 11 · Q17Show mark scheme →
Afull employment
Bincome redistribution
Clow inflation
Dbalance of payments stability
Mark scheme
13May / June 2024 · Paper 11 · Q18Show mark scheme →
Ato reduce a current account deficit
Bto reduce income inequality
Cto reduce inflation
Dto reduce structural unemployment
Mark scheme
14Oct / Nov 2023 · Paper 12 · Q22Show mark scheme →
Aincreasing direct taxation
Bincreasing the budget deficit
Cincreasing the budget surplus
Dincreasing the money supply
Mark scheme
15May / June 2023 · Paper 11 · Q4Show mark scheme →
Ahouseholds spend less on holidays abroad
Bincome tax is increased by the government
Cwages rise for construction workers
Dworld coffee price rises due to poor weather
Mark scheme
16May / June 2023 · Paper 12 · Q17Show mark scheme →
Ato increase the value of the exchange rate
Bto redistribute income from higher to lower income groups
Cto reduce a budget deficit
Dto reduce the rate of inflation
Mark scheme
17Oct / Nov 2022 · Paper 12 · Q16Show mark scheme →
Aconsumption and factor income
Bexports and imports
Cinvestments and savings
Dpublic expenditure and tax revenue
Mark scheme
18Oct / Nov 2022 · Paper 12 · Q17Show mark scheme →
Aindirect
Bprogressive
Cproportional
Dregressive
Mark scheme
19Oct / Nov 2022 · Paper 13 · Q16Show mark scheme →
ADirect taxation should exceed indirect taxation.
BExport earnings should exceed import expenditure.
CGovernment savings should exceed government investment.
DGovernment spending should exceed government revenue.
Mark scheme
20Oct / Nov 2022 · Paper 13 · Q17Show mark scheme →
Aincreasing the exchange rate
Breducing the power of trade unions
Creducing the rate of corporation tax
Dsetting a low interest rate
Mark scheme
21May / June 2022 · Paper 11 · Q17Show mark scheme →
Aincreasing the exchange rate
Breducing the power of trade unions
Creducing the rate of corporation tax
Dsetting a lower interest rate
Mark scheme
22May / June 2022 · Paper 12 · Q23Show mark scheme →
Adecreasing the rate of progressive income tax
Bdecreasing government spending on welfare benefits
Cincreasing the rate of progressive income tax
Dincreasing government spending on welfare benefits
Mark scheme
23Oct / Nov 2021 · Paper 12 · Q19Show mark scheme →
A$300 m
B$350 m
C$385 m
D$435 m
Mark scheme
24Oct / Nov 2021 · Paper 13 · Q19Show mark scheme →
A$300 m
B$350 m
C$385 m
D$435 m
Mark scheme
25May / June 2021 · Paper 11 · Q16Show mark scheme →
Ato discourage the consumption of harmful goods
Bto raise money for government spending
Cto redistribute income
Dto reduce total demand
Mark scheme
26May / June 2021 · Paper 11 · Q18Show mark scheme →
Adeficit / increase deficit
Bdeficit / reduce deficit
Csurplus / increase surplus
Dsurplus / reduce surplus
Mark scheme
27May / June 2021 · Paper 12 · Q16Show mark scheme →
Adirect tax
Bexchange rates
Cinterest rates
Dregulation
Mark scheme
28May / June 2021 · Paper 12 · Q18Show mark scheme →
Adecrease the highest tax rate; decrease benefits for the poor
Bincrease the highest tax rate; decrease benefits for the poor
Cdecrease the lowest tax rate; increase benefits for the poor
Dincrease the lowest tax rate; increase benefits for the poor
Mark scheme
29Oct / Nov 2020 · Paper 12 · Q18Show mark scheme →
Acorporation tax
Bindirect tax
Cprogressive tax
Dregressive tax
Mark scheme
30Oct / Nov 2020 · Paper 12 · Q21Show mark scheme →
Aa decrease in direct taxes and an increase in the rate of interest
Ba decrease in government expenditure and an increase in the rate of interest
Can increase in direct taxes and a decrease in the rate of interest
Dan increase in government expenditure and a decrease in the rate of interest
Mark scheme
31Oct / Nov 2020 · Paper 13 · Q18Show mark scheme →
Aa decrease in exports
Ban increase in imports
Can increase in production
Da worsening of the balance of trade in goods
Mark scheme
32Oct / Nov 2020 · Paper 13 · Q20Show mark scheme →
Adefence
Bhealth services
Cre-training grants
Dstreet lighting
Mark scheme
33May / June 2020 · Paper 11 · Q16Show mark scheme →
Acapital spending by firms
Binterest payments on government borrowing
Cinvestment in defence by the central government
Dsubsidies to bus companies from local government
Mark scheme
34May / June 2020 · Paper 11 · Q17Show mark scheme →
Awhen direct taxes and indirect taxes are equal
Bwhen exports and imports are equal
Cwhen government spending and government revenue are equal
Dwhen the demand for money and the supply of money are equal
Mark scheme
35May / June 2020 · Paper 12 · Q16Show mark scheme →
Acapital spending by firms
Binterest payments on government borrowing
Cinvestment in defence by the central government
Dsubsidies to bus companies from local government
Mark scheme
36May / June 2020 · Paper 12 · Q17Show mark scheme →
Awhen direct taxes and indirect taxes are equal
Bwhen exports and imports are equal
Cwhen government spending and government revenue are equal
Dwhen the demand for money and the supply of money are equal
Mark scheme
37May / June 2020 · Paper 12 · Q18Show mark scheme →
Ainheritance tax
Bprofits tax
Csales tax
Dvalue added tax
Mark scheme
38Oct / Nov 2019 · Paper 12 · Q16Show mark scheme →
AHigh-income purchasers pay a higher percentage of their income in tax.
BHigh-income purchasers pay a lower percentage of their income in tax.
CLow-income purchasers pay a lower percentage of their income in tax.
DLow-income purchasers and high-income purchasers pay the same percentage of their income in tax.
Mark scheme
39Oct / Nov 2019 · Paper 13 · Q16Show mark scheme →
Acapital gains tax
Bdeath duties
Cprofits tax
Dvalue added tax
Mark scheme
40Oct / Nov 2019 · Paper 13 · Q18Show mark scheme →
Acontinually progressive
Bprogressive then regressive
Cproportional
Dregressive then progressive
Mark scheme
41May / June 2019 · Paper 11 · Q16Show mark scheme →
AIt changes the distribution of income.
BIt ensures the equality of incomes.
CIt leads to more people paying income taxes.
DIt reduces the level of unemployment.
Mark scheme
42May / June 2019 · Paper 11 · Q17Show mark scheme →
Adirect
Bprogressive
Cproportional
Dregressive
Mark scheme
43Oct / Nov 2018 · Paper 12 · Q17Show mark scheme →
Awhen all goods and services are taxed equally
Bwhen economic growth is the same in all regions of the economy
Cwhen its total income equals its total expenditure
Dwhen total exports equal total imports
Mark scheme
44Oct / Nov 2018 · Paper 12 · Q18Show mark scheme →
A
B
C
D
Mark scheme
45Oct / Nov 2018 · Paper 13 · Q16Show mark scheme →
Acustoms duties on imported goods
Bexcise duties on cigarettes
Cincome tax
Dsales tax
Mark scheme
46Oct / Nov 2018 · Paper 13 · Q17Show mark scheme →
Awhen all goods and services are taxed equally
Bwhen economic growth is the same in all regions of the economy
Cwhen its total income equals its total expenditure
Dwhen total exports equal total imports
Mark scheme
47May / June 2018 · Paper 11 · Q18Show mark scheme →
AIt is progressive throughout.
BIt is proportional then becomes progressive.
CIt is proportional then becomes regressive.
DIt is regressive throughout.
Mark scheme
48May / June 2018 · Paper 12 · Q18Show mark scheme →
A$140 m
B$200 m
C$240 m
D$270 m
Mark scheme
49Oct / Nov 2017 · Paper 12 · Q16Show mark scheme →
Abudget deficit
Bconsumer spending
Cincome tax
Dpensions
Mark scheme
50Oct / Nov 2017 · Paper 12 · Q17Show mark scheme →
Ano / no / no
Bno / no / yes
Cyes / yes / no
Dyes / yes / yes
Mark scheme
51Oct / Nov 2017 · Paper 12 · Q18Show mark scheme →
A
B
C
D
Mark scheme
52Oct / Nov 2017 · Paper 12 · Q19Show mark scheme →
A$3000
B$5000
C$8000
D$11 000
Mark scheme
53Oct / Nov 2017 · Paper 13 · Q16Show mark scheme →
Abudget deficit
Bconsumer spending
Cincome tax
Dpensions
Mark scheme
54Oct / Nov 2017 · Paper 13 · Q17Show mark scheme →
Aincreasing the exchange rate
Bincreasing the rate of interest
Creducing government spending
Dreducing the general tax level
Mark scheme
55Oct / Nov 2017 · Paper 13 · Q18Show mark scheme →
AA
BB
CC
DD
Mark scheme
56Oct / Nov 2017 · Paper 13 · Q19Show mark scheme →
A$200 m
B$400 m
C$500 m
D$600 m
Mark scheme
57May / June 2017 · Paper 11 · Q16Show mark scheme →
Awhen some goods have a higher tax than others
Bwhen the rate of tax increases as income increases
Cwhen the tax is linked to the rate of inflation
Dwhen the tax is on incomes rather than on goods or services
Mark scheme
58May / June 2017 · Paper 11 · Q19Show mark scheme →
AExpenditure on welfare was higher than the combined expenditure on education and health.
BThe government was $2.8 billion in surplus.
CThe largest source of the government’s income was from direct taxation.
DThe number of business corporations was very small.
Mark scheme
59May / June 2017 · Paper 11 · Q22Show mark scheme →
A$926 million in deficit
B$4806 million in deficit
C$926 million in surplus
D$4806 million in surplus
Mark scheme
60May / June 2017 · Paper 12 · Q16Show mark scheme →
Awhen some goods have a higher tax than others
Bwhen the rate of tax increases as income increases
Cwhen the tax is linked to the rate of inflation
Dwhen the tax is on incomes rather than on goods or services
Mark scheme
61May / June 2017 · Paper 12 · Q17Show mark scheme →
Areducing housing subsidies
Breducing indirect tax on food
Creducing inheritance tax
Dreducing tax on the dividends on stocks and shares
Mark scheme
62May / June 2017 · Paper 12 · Q22Show mark scheme →
A$926 million in deficit
B$4806 million in deficit
C$926 million in surplus
D$4806 million in surplus
Mark scheme
63Oct / Nov 2016 · Paper 12 · Q18Show mark scheme →
A12, 14, 2, 5
B14, 15, 2, 14
C17, 13, 5, 10
D18, 10, 1, 10
Mark scheme
64Oct / Nov 2016 · Paper 13 · Q19Show mark scheme →
A12, 14, 2, 4
B14, 15, 2, 13
C17, 8, 5, 9
D17, 13, 5, 9
Mark scheme
65May / June 2016 · Paper 11 · Q16Show mark scheme →
Adecreasing government investment
Bdecreasing income tax
Cincreasing indirect taxation
Dincreasing interest rates
Mark scheme
66May / June 2016 · Paper 11 · Q18Show mark scheme →
Aless regressive / less regressive
Bless regressive / more regressive
Cmore regressive / less regressive
Dmore regressive / more regressive
Mark scheme
67May / June 2016 · Paper 11 · Q19Show mark scheme →
A$95 m
B$300 m
C$400 m
D$495 m
Mark scheme
68May / June 2016 · Paper 12 · Q16Show mark scheme →
Adecreasing government investment
Bdecreasing income tax
Cincreasing indirect taxation
Dincreasing interest rates
Mark scheme
69May / June 2016 · Paper 12 · Q17Show mark scheme →
Aindirect
Bprogressive
Cproportional
Dregressive
Mark scheme
70May / June 2016 · Paper 12 · Q19Show mark scheme →
A$300 m
B$350 m
C$385 m
D$435 m
Mark scheme