0455/22/F/M/24 

Some firms in Monaco have experienced external growth. Firms in Monaco pay high wages. Workers in Monaco benefit from fiscal policy which contributes to high employment. Their government does impose VAT on food, including fruit. Some economists have suggested that instead of taxing fruit, governments should provide free fruit to consumers. 

• Analyse how fiscal policy can increase employment. [6] 

0455/22/F/M/24 

Since 2016, South Korea’s population has declined, due to a falling birth rate, and a high proportion of its population is now aged over 64. The South Korean government has used tax revenue to give cash incentives to couples to have more children. However, many parents have chosen to have fewer children and spend more on each child to ensure they get a good education. South Korea now has fewer but larger schools.

• Explain two reasons for a change in the amount of tax revenue a government receives. [4]

0455/21/O/N/23 

Digital money, such as cryptocurrencies, is increasingly being used. Digital money transactions take place on electronic devices such as computers and smartphones. However, there can be market failure due to external costs arising from high energy usage of non‑renewable sources. One way of reducing external costs is to tax the product. 

• Identify two types of tax. [2] 

0455/23/O/N/22 

Romania’s indirect tax rate was 19% between 2017 and 2019. There is a high proportion of foreign multinational companies (MNCs), especially US MNCs, in Romania. MNCs have helped to increase productivity in Romania and lower its unemployment rate. There are also benefits of MNCs to their home countries. 

Define, with an example, an indirect tax. [2] 

0455/22/O/N/22 

In 2019, Russia had an unemployment rate of 4.6%. Russia experienced full employment in the past. Its government wants unemployment to be lower. In 2018, the Russian government cut its spending which may have increased poverty. In both 2018 and 2019, the government did not change its income tax rate. Russia operates a proportional tax rate system. 

• Explain the difference between a proportional income tax system and a progressive income tax system. [4] 

0455/21/M/J/22 

Australia’s foreign exchange rate fluctuates. The value of Australia’s exports is regularly greater than the value of its imports. Australia is Papua New Guinea’s main trading partner. In 2019, the government of Papua New Guinea increased income tax to reduce its inflation rate. It used other policy measures to increase its economic growth rate. 

• Analyse how an increase in income tax can affect a country’s inflation rate. [6] 

0455/22/F/M/22 

South Africa (SA) experienced a recession in the second half of 2019 and an unemployment rate of 29%. Only a small proportion of this unemployment was frictional. South Africa’s foreign exchange rate fell from 1 SA rand = US$0.08 in 2018 to 1 SA rand = US$0.06 in 2019. South Africa had reduced import tariffs, but in 2019 some South African economists suggested tariffs should be used to protect its infant industries. 

• Discuss whether or not a reduction in income tax will end a recession. [8] 

0455/22/F/M/21 

It is estimated that half of Egyptian men smoke. This is one of the highest rates in the world. In recent years the Egyptian government has increased the tax on cigarettes. The government and central bank have also tried to reduce inflation and improve Egypt’s international trade performance. The Egyptian government could use subsidies to reduce its deficit on the current account of its balance of payments. 

• Identify two qualities of a good tax. [2] 

• Explain two reasons why governments tax cigarettes. [4] 

0455/22/O/N/20 

The population of Hungary is the most obese in Europe. Hungarians eat fewer vegetables than most Europeans and more food types that may be considered to be demerit goods. In 2017, the Hungarian government introduced a tax on unhealthy food, known as the chips tax. The tax has had some success in moving demand to healthier foods. Some economists suggest that governments should use price controls as well as taxes to influence the food market. 

• Analyse the effects on income distribution and tax revenue of an increase in indirect taxes. [6] 

0455/22/O/N/20 

Mexico has a history of trade deficits. The government is moving the economy closer to free trade, to try to improve its macroeconomic performance. It was predicted in 2017 that Mexico’s economy would experience a small rise in its unemployment rate. In 2017 the economy’s inflation rate was 6.6%, the highest rate since 2001. A number of policy measures may be used to reduce inflation, including increasing the rate of income tax. 

• Discuss whether or not an increase in the rate of income tax will reduce inflation. [8] 

0455/21/O/N/20 

The election of a new president in South Africa in 2018 led to improvement in business and consumer confidence. Inflation rates fell despite a rise in total demand. One government policy measure established areas known as economic zones where firms pay lower, or no, taxes. These zones encourage domestic firms to become internationally competitive which could reduce the deficit on the current account of South Africa’s balance of payment. 

• Discuss whether or not lower taxes on firms will be beneficial for an economy. [8] 

0455/23/M/J/20 

Ireland has one of the lowest rates of corporation tax in Europe. This has encouraged many multinational companies (MNCs) to produce in Ireland. Other reasons why firms want to produce in Ireland include access to freer trade with other European countries, higher labour productivity and government grants. 

• Explain two reasons why governments levy taxes. [4] 

0455/22/M/J/20 

In 2017, the Japanese government announced improvements to its tax system. The amount of tax raised is influenced by the size and age distribution of a country’s population. Japan’s birth and death rates are falling, its population is ageing, and it has low immigration. Overall, Japan’s population is decreasing. 

• State two qualities of a good tax. [2] 

0455/21/M/J/20 

Economists are uncertain about the future United States (US) macroeconomic performance. For instance, in recent years, US unemployment has fallen while the deficit on the current account of the balance of payments has fluctuated. Whether its current account deficit will rise or fall in the future may be affected by proposed tax cuts. Some economists suggest that the US government should not be concerned about the country’s current account deficit. 

• Analyse how tax cuts could increase exports. [6] 

0455/22/F/M/20 

The Chinese government reformed the Chinese tax system in 2016. It extended VAT (sales tax) from the sale of goods to the sale of services enabling it to cut the corporation tax rate. Taxes on goods and services are usually regressive. The Chinese government wanted to raise living standards and hoped that a cut in the tax rate firms pay would attract multinational companies (MNCs) to the country. 

• State two reasons for levying taxes. [2] 

• Explain the difference between a progressive tax and a regressive tax. [4] 

• Analyse how a cut in the rates of corporation tax and income tax may influence the number of MNCs setting up in the country. [6] 

0455/22/

Teachers in many countries oppose their governments’ cuts in spending on education. They worry that this could reduce the standard of education and also the welfare of teachers employed in the state sector. Some teachers specialise in teaching one subject while others teach a number of subjects. 

• Explain two reasons why a government may want to cut spending on education. [4] 

0455/23/M/J/18 

The state of California has the most progressive tax system in the USA. The tax system helps reduce high poverty rates. Policy makers are considering reforming sales tax in the state to include services, while reducing the use of direct taxes. 

• Define progressive tax. [2] 

• Discuss whether a government should increase indirect taxes and whether it should reduce direct taxes. [8] 

0455/22/M/J/18 

In February 2016, share prices on stock exchanges fell throughout the world. There were a number of reasons for this; including concerns about the slowdown in world growth, the possibility of deflation and unemployment, and fears that some commercial banks could go out of business. 

• Discuss whether or not government policy measures to reduce unemployment will cause inflation. [8] 

0455/21/M/J/18 

More governments are imposing taxes on unhealthy food and drinks. Such taxes are usually regressive. Some of these governments are also increasing their spending on healthcare. In other countries healthcare is provided by the private sector. The number of state-owned enterprises is declining in a number of countries due to privatisation. 

• Define regressive tax. [2] 

• Analyse why a government imposes taxes. [6] 

0455/21/M/J/18 

In 2014, the government of Kazakhstan devalued its currency, the tenge. A year later the country still had a current account deficit. Therefore, in 2016 it considered adopting a floating exchange rate which might help to remove the deficit. However, it had concerns that this might affect the country’s inflation rate which was already high at 17%. 

• Analyse how fiscal policy measures could reduce inflation. [6] 

0455/22/F/M/18 

In March 2016, the Canadian government announced increases in government spending including an increased subsidy to environmentally friendly technology. It also announced that high income earners would face an increase from 29% to 33% in the highest rate of income tax. Changes in government spending and taxation can influence a country’s inflation rate. 

• Discuss whether or not an increase in the highest rate of income tax will benefit an economy. [8]