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Question
The government imposes tax ______.
Options
To raise revenue
To reduce inequalities of income and wealth
Both to raise revenue and to reduce inequalities of income and wealth
Neither to raise revenue nor to reduce inequalities of income and wealth
Solution
Both to raise revenue and to reduce inequalities of income and wealth.
Explanation:
- The government imposes taxes to raise revenue for funding public services, infrastructure, and other government activities.
- Taxes are also used to reduce inequalities of income and wealth by redistributing wealth through progressive taxation and social welfare programs.
RELATED QUESTIONS
Observe the relationship of the first pair of words and complete the second pair:
Tax paid by person on whose it is imposed : Direct tax.
A tax is paid by some person and the final burden is born by some other person : ______.
Define fiscal policy.
Name any two instruments of Fiscal Policy.
How can tax be used as an instrument to bring about equitable distribution of wealth and income?
'The role of the State is important in developing the economic infrastructure of a developing economy'. Give two reasons to support your answer.
Classify the following type of tax into direct and indirect taxes:
Income tax
An indirect tax can be made progressive by imposing higher tax rates on luxuries. Justify the above statement.
Explain clearly tour ways by which the state can promote economic growth and development.
State the following:
Three demerits of an Indirect tax.
Define the following term:
Fiscal deficit
