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.
51 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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Explain the difference between a progressive and a regressive tax.
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Explain how expansionary fiscal policy can be used to reduce unemployment.
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A leakage (withdrawal) from the circular flow that reduces the multiplier effect is:
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If the marginal propensity to consume is 0.8, the value of the multiplier is:
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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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National debt is different from a budget deficit in that:
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Explain two ways in which government spending contributes to economic development.
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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 two factors that determine the size of the multiplier.
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