Fiscal policy
5.2What the syllabus asks of you
- meaning of government budget
- distinction between a government budget deficit and a government budget surplus
- meaning and significance of the national debt
- taxation: types of taxes: direct/indirect, progressive/regressive/proportional
- taxation: rates of tax: marginal and average rates of taxation (mrt, art)
- taxation: reasons for taxation
- government spending: types of spending: capital (investment) and current
- government spending: reasons for government spending
- distinction between expansionary and contractionary fiscal policy
- AD/AS analysis of the impact of expansionary and contractionary fiscal policy on the equilibrium level of national income and the level of real output, the price level and employment
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.
89 questions
1May / June 2026 · Paper 11 · Q21Show mark scheme →
AFrance
BNorway
CSweden
DSwitzerland
Mark scheme
2May / June 2026 · Paper 12 · Q22Show mark scheme →
Adecrease decrease decrease
Bdecrease increase increase
Cincrease decrease decrease
Dincrease increase increase
Mark scheme
3May / June 2026 · Paper 12 · Q23Show mark scheme →
A$60 billion
B$70 billion
C$80 billion
D$90 billion
Mark scheme
4May / June 2026 · Paper 13 · Q14Show mark scheme →
AIt is a progressive tax structure.
BIt is a proportional tax structure.
CIt is a regressive tax structure.
DThe average rate of taxation decreases as incomes increase.
Mark scheme
5May / June 2026 · Paper 14 · Q20Show mark scheme →
Ahigher government spending on education financed by an equal rise in direct taxation
Bhigher direct taxation with government spending unchanged to create a budget surplus
Chigher spending on infrastructure financed by a budget deficit
Dlower interest rates to promote investment spending in the private sector
Mark scheme
6May / June 2026 · Paper 14 · Q22Show mark scheme →
AA tax which takes a larger percentage of income from those on high incomes.
BA tax which takes a larger amount of income from those on low incomes.
CA tax which takes the same amount of income from all income groups.
DA tax which takes the same percentage of income from all income groups.
Mark scheme
7May / June 2026 · Paper 32 · Q28Show mark scheme →
Athe lowering of interest rates to encourage investment in solar power
Bthe relaxing of regulations to allow the development of a new hydropower project
Cthe spending of the loan supporting its existing oil industry after oil prices collapsed
Dthe subsidising of a partnership with a French company to establish a chain of tourist hotels
Mark scheme
8Oct / Nov 2025 · Paper 11 · Q18Show mark scheme →
Acomputers for classrooms
Bgrants for university students
Crent for school buildings
Dwages for teachers
Mark scheme
9Oct / Nov 2025 · Paper 11 · Q19Show mark scheme →
Aincreasing expenditure by firms on skills training programmes for unskilled workers
Bincreasing the commercial banks’ lending ability
Creducing the rate of income tax for all income earners
Dreducing the rate of interest on loans to manufacturing companies
Mark scheme
10Oct / Nov 2025 · Paper 13 · Q24Show mark scheme →
Adecreasing the rate of income tax
Bdecreasing spending on education
Cincreasing the level of sales tax
Dincreasing welfare benefit payments
Mark scheme
11Oct / Nov 2025 · Paper 13 · Q25Show mark scheme →
AIt is both a contractionary fiscal policy and a supply-side policy.
BIt is both an expansionary fiscal policy and a supply-side policy.
CIt is both an expansionary fiscal policy and an expansionary monetary policy.
DIt is both an expansionary monetary policy and a supply-side policy.
Mark scheme
12Oct / Nov 2025 · Paper 14 · Q21Show mark scheme →
Aan increase in income tax
Ban increase in private sector investment
Can increase in spending on public goods
Dan increase in the money supply
Mark scheme
13Oct / Nov 2025 · Paper 14 · Q24Show mark scheme →
Aindirect
Bprogressive
Cproportional
Dregressive
Mark scheme
14Oct / Nov 2025 · Paper 34 · Q19Show mark scheme →
Aan increase in government spending on new infrastructure such as roads
Ban increase in government spending on retraining workers
Ca reduction in the rate of tax on imports
Dan increase in the rate of tax on goods and services
Mark scheme
15May / June 2025 · Paper 11 · Q25Show mark scheme →
A1000, 1000, 1000
B1000, 1500, 2000
C1000, 2000, 4000
D1000, 2500, 8000
Mark scheme
16May / June 2025 · Paper 12 · Q22Show mark scheme →
Aless likely / less likely / less likely
Bmore likely / less likely / more likely
Cless likely / more likely / less likely
Dmore likely / more likely / less likely
Mark scheme
17May / June 2025 · Paper 12 · Q23Show mark scheme →
Aindirect
Bprogressive
Cproportional
Dregressive
Mark scheme
18May / June 2025 · Paper 13 · Q15Show mark scheme →
AGraph A: income after tax vs income before tax, with points at (100, 100) and (200, 175)
BGraph B: income after tax vs income before tax, with points at (50, 50) and (200, 175)
CGraph C: income after tax vs income before tax, with points at (50, 50) and (200, 150)
DGraph D: income after tax vs income before tax, with points at (100, 100) and (200, 175)
Mark scheme
19May / June 2025 · Paper 13 · Q22Show mark scheme →
Afixing a currency to another country's currency
Btightening credit regulations on banks
Cproviding guidance to industry and the public
Dmanaging changes in the level of government debt
Mark scheme
20May / June 2025 · Paper 13 · Q23Show mark scheme →
AA budget surplus becomes a budget deficit in year 3.
BNational debt is likely to be falling by the end of year 3.
CThe current account balance is in equilibrium in year 2.
DThe economy is at full employment equilibrium in year 2.
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21May / June 2025 · Paper 32 · Q24Show mark scheme →
Athe creation of additional money
Ba current account deficit on the balance of payments
Ca surplus in the government's budget
Dthe crowding out of private sector investment
Mark scheme
22Feb / March 2025 · Paper 12 · Q22Show mark scheme →
Adecrease direct taxes, decrease indirect taxes, increase subsidies on food and public transport
Bdecrease direct taxes, increase indirect taxes, increase subsidies on food and public transport
Cincrease direct taxes, decrease indirect taxes, increase subsidies on food and public transport
Dincrease direct taxes, increase indirect taxes, decrease subsidies on food and public transport
Mark scheme
23Feb / March 2025 · Paper 12 · Q25Show mark scheme →
AAll taxpayers pay the same proportion of income in taxes.
BLow-income earners pay a lower proportion of income in taxes than high-income earners.
CLow-income earners pay less in taxes than high-income earners.
DLow-income earners pay more in taxes than high-income earners.
Mark scheme
24Oct / Nov 2024 · Paper 11 · Q20Show mark scheme →
Aaggregate demand decrease; aggregate supply increase
Baggregate demand decrease; aggregate supply unchanged
Caggregate demand increase; aggregate supply increase
Daggregate demand increase; aggregate supply unchanged
Mark scheme
25Oct / Nov 2024 · Paper 11 · Q22Show mark scheme →
Agovernment spending decrease; taxes decrease; money supply decrease
Bgovernment spending decrease; taxes increase; money supply decrease
Cgovernment spending increase; taxes decrease; money supply increase
Dgovernment spending increase; taxes increase; money supply increase
Mark scheme
26Oct / Nov 2024 · Paper 13 · Q22Show mark scheme →
Aa fall in the lowest level of income when income tax has to be paid and a fall in the rate of inheritance tax
Ba fall in the charge made for visits to a doctor and a rise in the level of unemployment benefit
Ca rise in the rate of income tax charged at higher levels of income and a rise in the standard rate of corporation tax
Da rise in the standard rate of income tax and a fall in the standard rate of goods and services tax
Mark scheme
27Oct / Nov 2024 · Paper 13 · Q23Show mark scheme →
AGovernment revenue exceeds expenditure.
BImports exceed exports.
CThe government has an expansionary fiscal policy.
DThe national debt is increasing.
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28Oct / Nov 2024 · Paper 32 · Q22Show mark scheme →
AIt boosts economic activity.
BIt promotes the incentive to work.
CIt reduces the budget deficit.
DIt reduces the incentive to evade taxes.
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29May / June 2024 · Paper 11 · Q21Show mark scheme →
AA surplus implies that the balance of payments is in surplus.
BA surplus implies that the government is spending too much money.
CA deficit implies that the economy is in decline.
DA deficit implies that the national debt is increasing.
Mark scheme
30May / June 2024 · Paper 11 · Q22Show mark scheme →
Aa balance of payments deficit
Bcyclical unemployment
Cthe level of wages
Dthe rate of inflation
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31May / June 2024 · Paper 13 · Q21Show mark scheme →
Adepreciation of the exchange rate
Beconomic growth
Clow unemployment
Dprice stability
Mark scheme
32Feb / March 2024 · Paper 12 · Q20Show mark scheme →
A–10%
B0%
C+10%
D+20%
Mark scheme
33Oct / Nov 2023 · Paper 11 · Q15Show mark scheme →
Aaverage rate of taxation 15%, marginal rate of taxation 16%
Baverage rate of taxation 16%, marginal rate of taxation 20%
Caverage rate of taxation 16%, marginal rate of taxation 28%
Daverage rate of taxation 20%, marginal rate of taxation 20%
Mark scheme
34Oct / Nov 2023 · Paper 11 · Q28Show mark scheme →
AA
BB
CC
DD
Mark scheme
35Oct / Nov 2023 · Paper 12 · Q14Show mark scheme →
Acorporate profit taxes
Bstate pension benefits
Cspecific tax on cigarettes
Dunemployment benefits
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36Oct / Nov 2023 · Paper 12 · Q24Show mark scheme →
AThe aggregate demand curve shifts left.
BThe aggregate demand curve shifts right.
CThe aggregate supply curve shifts left.
DThe aggregate supply curve shifts right.
Mark scheme
37Oct / Nov 2023 · Paper 12 · Q29Show mark scheme →
AAD1
BAD2
CAD3
DAD4
Mark scheme
38Oct / Nov 2023 · Paper 12 · Q30Show mark scheme →
Aprice level: fall; real output: fall
Bprice level: fall; real output: rise
Cprice level: rise; real output: fall
Dprice level: rise; real output: rise
Mark scheme
39Oct / Nov 2023 · Paper 13 · Q29Show mark scheme →
Aa decrease in the budget deficit
Ba decrease in the national debt
Can increase in the balance of payments deficit on the current account
Dan increase in the interest rates
Mark scheme
40Oct / Nov 2023 · Paper 31 · Q14Show mark scheme →
AAggregate demand will increase.
BEmployment opportunities will increase.
CIncome equality will improve.
DTax revenues will increase.
Mark scheme
41Oct / Nov 2023 · Paper 32 · Q20Show mark scheme →
Aan increase in effective demand
Ban increase in unemployment
Ca reduction in inflation
Da reduction in the volume of spending
Mark scheme
42May / June 2023 · Paper 11 · Q28Show mark scheme →
Athe accumulated borrowing of the government
Bthe difference between government spending and taxation
Cthe interest paid by the government on all the money it owes
Dthe total money owed by all households in the country
Mark scheme
43May / June 2023 · Paper 13 · Q30Show mark scheme →
Aan increase in direct taxes
Ban increase in interest rates
Ca reduction in indirect taxes
Da reduction in its budget surplus
Mark scheme
44May / June 2023 · Paper 31 · Q23Show mark scheme →
Adecrease budget deficit; decrease interest rates
Bdecrease budget deficit; increase interest rates
Cincrease budget deficit; decrease interest rates
Dincrease budget deficit; increase interest rates
Mark scheme
45May / June 2023 · Paper 32 · Q23Show mark scheme →
Aan automatic stabiliser
Bcrowding out
Cthe accelerator
Dthe substitution effect
Mark scheme
46May / June 2023 · Paper 32 · Q25Show mark scheme →
Ato reduce the budget deficit
Bto reduce the inequality of income distribution
Cto reduce the level of unemployment
Dto reduce the rate of inflation
Mark scheme
47May / June 2023 · Paper 33 · Q23Show mark scheme →
Adecrease budget deficit; decrease interest rates
Bdecrease budget deficit; increase interest rates
Cincrease budget deficit; decrease interest rates
Dincrease budget deficit; increase interest rates
Mark scheme
48Feb / March 2023 · Paper 12 · Q28Show mark scheme →
Aaggregate demand
Bbudget surplus
Cnominal income
Dinflation
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49Feb / March 2023 · Paper 32 · Q17Show mark scheme →
Atotal GDP decreases, unemployment rises, government spending decreases
Btotal GDP decreases, unemployment rises, government spending no change
Ctotal GDP increases, unemployment falls, government spending increases
Dtotal GDP increases, unemployment falls, government spending no change
Mark scheme
50Feb / March 2023 · Paper 32 · Q23Show mark scheme →
Afull employment ✓, stable price level ✓, current account surplus ✗
Bfull employment ✗, stable price level ✓, current account surplus ✓
Cfull employment ✗, stable price level ✗, current account surplus ✓
Dfull employment ✓, stable price level ✗, current account surplus ✗
Mark scheme
51Oct / Nov 2022 · Paper 11 · Q28Show mark scheme →
Afiscal policy ✓, monetary policy ✗, supply side policy ✓
Bfiscal policy ✗, monetary policy ✓, supply side policy ✓
Cfiscal policy ✓, monetary policy ✓, supply side policy ✓
Dfiscal policy ✓, monetary policy ✓, supply side policy ✗
Mark scheme
52Oct / Nov 2022 · Paper 12 · Q19Show mark scheme →
ALow-income earners pay the same proportion of income in taxes as high-income earners.
BLow-income earners pay a lower proportion of income in taxes than high-income earners.
CLow-income earners pay less in taxes than high-income earners.
DLow-income earners pay more in taxes than high-income earners.
Mark scheme
53Oct / Nov 2022 · Paper 12 · Q29Show mark scheme →
Afiscal policy
Binternational trade policy
Cmonetary policy
Dsupply side policy
Mark scheme
54Oct / Nov 2022 · Paper 12 · Q30Show mark scheme →
AA
BB
CC
DD
Mark scheme
55Oct / Nov 2022 · Paper 13 · Q15Show mark scheme →
Aneutral
Bprogressive
Cproportional
Dregressive
Mark scheme
56Oct / Nov 2022 · Paper 13 · Q22Show mark scheme →
AA
BB
CC
DD
Mark scheme
57Oct / Nov 2022 · Paper 13 · Q29Show mark scheme →
Adecrease the budget deficit; decrease the money supply
Bdecrease the budget deficit; increase the money supply
Cincrease the budget deficit; decrease the money supply
Dincrease the budget deficit; increase the money supply
Mark scheme
58Oct / Nov 2022 · Paper 32 · Q27Show mark scheme →
Aincrease in the budget deficit +2% of GDP, change in GDP +4%, price of government bonds decreasing
Bincrease in the budget deficit +2% of GDP, change in GDP +4%, price of government bonds increasing
Cincrease in the budget deficit +4% of GDP, change in GDP +2%, price of government bonds decreasing
Dincrease in the budget deficit +4% of GDP, change in GDP +2%, price of government bonds increasing
Mark scheme
59Oct / Nov 2022 · Paper 33 · Q29Show mark scheme →
Aimproves / improves / improves
Bimproves / improves / worsens
Cworsens / worsens / improves
Dworsens / worsens / worsens
Mark scheme
60Oct / Nov 2022 · Paper 33 · Q30Show mark scheme →
Ainflation falls, unemployment rises
Binflation falls, unemployment falls
Cinflation rises, unemployment rises
Dinflation rises, unemployment falls
Mark scheme
61May / June 2022 · Paper 11 · Q28Show mark scheme →
Aa decrease in the budget deficit
Ba decrease in the budget surplus
Ca decrease in the exchange rate
Da decrease in the money supply
Mark scheme
62May / June 2022 · Paper 12 · Q14Show mark scheme →
Aincreasing the rate of wealth tax and raising the rate of sales tax (VAT) on luxury products
Bintroducing a tax on owning property based on its sales value and increasing the rate of income tax
Creducing the basic rate of income tax and increasing the duty on fuel
Dremoving the tax-free allowance for income tax and extending sales tax (VAT) to include all food
Mark scheme
63May / June 2022 · Paper 12 · Q29Show mark scheme →
Aan increase in the budget deficit
Ban increase in the budget surplus
Can increase in the interest rate
Dan increase in the money supply
Mark scheme
64May / June 2022 · Paper 13 · Q15Show mark scheme →
A0
B+100
C+150
D+300
Mark scheme
65May / June 2022 · Paper 13 · Q16Show mark scheme →
Acorporation tax in India that is imposed on the profits of companies
Bimport duties in Brazil that are imposed on imported goods
Cspecific tax in South Africa imposed on the purchase of cigarettes
Dstamp duty in Malaysia that is the tax on the purchase of a residential property
Mark scheme
66May / June 2022 · Paper 14 · Q18Show mark scheme →
Aup to $10 000: progressive; above $10 000: progressive
Bup to $10 000: progressive; above $10 000: proportional
Cup to $10 000: proportional; above $10 000: progressive
Dup to $10 000: proportional; above $10 000: proportional
Mark scheme
67May / June 2022 · Paper 14 · Q29Show mark scheme →
Abudget deficit
Bexchange rate
Cmoney supply
Drate of direct taxation
Mark scheme
68May / June 2022 · Paper 14 · Q30Show mark scheme →
Afiscal ✓, monetary ✗, supply side ✓
Bfiscal ✓, monetary ✗, supply side ✗
Cfiscal ✗, monetary ✓, supply side ✓
Dfiscal ✗, monetary ✓, supply side ✗
Mark scheme
69Feb / March 2022 · Paper 12 · Q14Show mark scheme →
AAn original budget deficit was reduced.
BAn original budget surplus was reduced.
CConsumer expenditure decreased.
DPublic sector productivity decreased.
Mark scheme
70Feb / March 2022 · Paper 12 · Q17Show mark scheme →
Aprogressive | progressive | regressive
Bprogressive | regressive | progressive
Cregressive | progressive | regressive
Dregressive | regressive | progressive
Mark scheme
71Oct / Nov 2021 · Paper 11 · Q15Show mark scheme →
AThe cost of collecting the tax should be low.
BThe tax should be easy to pay.
CThe tax should have a neutral effect on the use of resources.
DThe tax should have a positive effect on aggregate supply.
Mark scheme
72Oct / Nov 2021 · Paper 11 · Q28Show mark scheme →
Afiscal policy: contractionary; monetary policy: expansionary; supply-side policy: contractionary
Bfiscal policy: expansionary; monetary policy: contractionary; supply-side policy: expansionary
Cfiscal policy: expansionary; monetary policy: expansionary; supply-side policy: contractionary
Dfiscal policy: expansionary; monetary policy: expansionary; supply-side policy: expansionary
Mark scheme
73Oct / Nov 2021 · Paper 11 · Q30Show mark scheme →
Aa reduction in income tax and an increase in interest rates
Ba reduction in income tax and an increase in production subsidies
Can increase in corporate tax and an increase in government spending
Dan increase in value added tax (sales tax) and a reduction in government spending
Mark scheme
74Oct / Nov 2021 · Paper 12 · Q15Show mark scheme →
AHigh earners pay a higher proportion of their income in tax than low earners.
BHigh earners pay a lower proportion of their income in tax than low earners.
CHigh earners pay the same proportion of their income in tax as low earners.
DLow earners pay more tax than high earners.
Mark scheme
75Oct / Nov 2021 · Paper 12 · Q28Show mark scheme →
Aa decrease in import tariffs
Ba decrease in the rate of interest
Can increase in the sale of state-owned assets
Dan increase in government pension payments
Mark scheme
76Oct / Nov 2021 · Paper 12 · Q30Show mark scheme →
Ahigher direct taxes; above purchasing power parity
Bhigher direct taxes; below purchasing power parity
Chigher indirect taxes; above purchasing power parity
Dhigher indirect taxes; below purchasing power parity
Mark scheme
77Oct / Nov 2021 · Paper 31 · Q22Show mark scheme →
Adecreasing duties on imports
Bdecreasing unemployment benefits
Cincreasing income tax
Dincreasing interest rates
Mark scheme
78Oct / Nov 2021 · Paper 32 · Q29Show mark scheme →
Aincreasing spending on education and health
Bincreasing the basic rate of income tax
Climiting wage increases in the public sector
Dpreventing mergers of large companies
Mark scheme
79May / June 2021 · Paper 12 · Q17Show mark scheme →
A1200
B1300
C1400
D1600
Mark scheme
80May / June 2021 · Paper 12 · Q28Show mark scheme →
Abecause the contractionary monetary policy will over-ride the expansionary fiscal policy
Bbecause the monetary and fiscal policies involved will reinforce each other
Cbecause the expansionary monetary policy will over-ride the contractionary fiscal policy
Dbecause the monetary and fiscal policies involved will cancel each other out
Mark scheme
81May / June 2021 · Paper 13 · Q18Show mark scheme →
A50
B500
C750
D800
Mark scheme
82May / June 2021 · Paper 31 · Q13Show mark scheme →
A1 and 3
B2 and 3
C2 only
D3 only
Mark scheme
83May / June 2021 · Paper 31 · Q23Show mark scheme →
Aincrease in the budget deficit; central bank buys back government bonds
Bincreased government spending on roads; increased short term rate of interest
Creduce income taxes; central bank sells more government bonds
Dreduce wealth taxes; increase commercial banks' cash deposit ratio
Mark scheme
84May / June 2021 · Paper 32 · Q30Show mark scheme →
AW, X and Y
BW, X and Z
CW, Y and Z
DX, Y and Z
Mark scheme
85May / June 2021 · Paper 33 · Q13Show mark scheme →
A1 and 3
B2 and 3
C2 only
D3 only
Mark scheme
86May / June 2021 · Paper 33 · Q23Show mark scheme →
Aincrease in the budget deficit; central bank buys back government bonds
Bincreased government spending on roads; increased short term rate of interest
Creduce income taxes; central bank sells more government bonds
Dreduce wealth taxes; increase commercial banks' cash deposit ratio
Mark scheme
87Feb / March 2021 · Paper 12 · Q30Show mark scheme →
Afiscal policy ✓, supply-side policy ✓, monetary policy ✗
Bfiscal policy ✓, supply-side policy ✓, monetary policy ✓
Cfiscal policy ✓, supply-side policy ✗, monetary policy ✗
Dfiscal policy ✗, supply-side policy ✓, monetary policy ✗
Mark scheme
88Feb / March 2021 · Paper 32 · Q23Show mark scheme →
Adecrease direct taxation and increase interest rates
Bdecrease direct taxation and increase quantitative easing
Cincrease direct taxation and increase interest rates
Dincrease direct taxation and increase quantitative easing
Mark scheme
89Feb / March 2021 · Paper 32 · Q30Show mark scheme →
Aincreasing government spending
Bincreasing taxes
Cincreasing the money supply
Dreducing interest rates
Mark scheme