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ECS1601 ASSESSMENT 2 OF 2024 EXPECTED QUESTIONS AND ANSWERS
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Started on Wednesday, 24 July 2024, 8:25 AM OSCAR THE TUTORState Finished oscardiura@gmail.com
Completed on Wednesday, 24 July 2024, 9:02 AM +27737560989
for FAC MAC ECS DSC TAX QMI
Time taken 37 mins 18 secs FIN INV BNU STA tutorials
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Question 1 Which of the following elements are regarded as government intervention?
Complete
Mark 1.00 out a. Taxation and borrowing only.
of 1.00
b. Spending and taxation only.
Flag
question c. Spending, borrowing and taxation.
d. Spending, interest rate and borrowing.
The elements of government intervention are spending, taxation, and borrowing.
Question 2 Which of the following statements are correct?
Complete
a. The difference between government spending and borrowing is called the budget
Mark 0.00 out deficit.
of 1.00
b. If government finances part of its spending from borrowing from the central bank,
Flag
question
this is called inflationary financing.
c. Expansionary fiscal policy implies that taxes must increase, and government
spending must be limited.
a. All statements are correct.
b. a and b
c. b and c
d.
a
e. b
Your answer is incorrect.
The budget deficit refers to the difference between government spending and
current revenue of the government, see section 3.2. See section 3.5 on fiscal policy.
,Question 3 Tax evasion occurs when …
Complete
Mark 1.00 out a. households legally alter their behavior to avoid paying tax.
of 1.00
b. people pay tax according to their ability
Flag
question c. taxation causes people in the same position to be taxed differently.
d. people do not pay the taxes that they are supposed to pay.
Tax evasion is illegal, refers to avoiding the true tax liability by not declaring the
profit or income made to the receiver of revenue, and is subject to criminal
charges.
Question 4 In 2020, Melokuhle earned a salary of R20 000 a month and paid an income tax of
Complete R2 800; his salary increased to R25 000 a month, and he now pays an income tax of
Mark 1.00 out
R3 100. This is an example of a………
of 1.00
Flag a. regressive tax.
question
b. general tax.
c. progressive tax.
d. proportional tax.
Regressive tax is when tax paid to taxable income decreases as the taxable income
increases.
Question 5 The following table gives the tax rates for individuals for the 2016 tax year:
Complete
Mark 1.00 out
2016 tax year (1 March 2015 - 29 February 2016)
of 1.00 Taxable income (R) Rates of tax (R)
Flag
question
0 - 181 900 18% of each R1
181 901 - 284 100 32 742 + 26% of the amount above 181 900
284 101 - 393 200 59 314 + 31% of the amount above 284 100
393 201 - 550 100 93 135 + 36% of the amount above 393 200
550 101 - 701 300 149 619 + 39% of the amount above 550 100
701 301 and above 208 587 + 41% of the amount above 701 300
, If the government decides to increase the tax rate for those earning more than R701
300 from R208 587 + 41% of the amount above R701 300 to R208 587 + 43%, it
implies that it has increased the … for high-income groups, which is an example of
…
a. marginal tax rate; vertical equity.
b. marginal tax rate; horizontal equity.
c. capital gains tax; value added tax.
d. minimum tax amount; vertical equity.
See section 3.6 of the textbook. The change from 41% to 43% is a change in the
marginal tax rate, since it increases the percentage tax you must pay on income
above a certain threshold (R701 301). Since this is an increase for high income
earners, we are dealing here with vertical equity meaning that those who are more
able to pay taxes should contribute more than those less able to pay tax.
Horizontal equity means that individuals with the same income should pay the
same amount in taxes.
Question 6 When government is paying old-age pensions, it is intervening in the economy…
Complete
Mark 1.00 out a. by employing labour.
of 1.00
b. by buying goods and services.
Flag
question c. by making transfer payments.
d. by raising taxes.
Transfer payments take place when income is transferred from one group to
another group. In the case of old-age pensions, the state is not paying for a good or
service but is transferring income from taxpayers to pensioners.
Question 7 A tax is
Complete
Mark 0.00 out a. regressive when everybody pays the same amount of tax.
of 1.00
b.
Flag proportional when tax is levied on goods and services at the same
question standard rate.
c.
proportional when everybody pays the same amount of tax.
, d. regressive when all taxpayers pay the same rate.
Your answer is incorrect.
Progressive, regressive and proportional tax are discussed in section 3.6 of the
textbook.
Question 8 Which of the following statements are correct?
Complete a) South African government raises most of its tax revenue through personal
Mark 1.00 out
income tax and value-added tax.
of 1.00 b) Personal income tax in South Africa is a progressive tax.
c) Government should implement restrictive fiscal policy measures during a
Flag
question recession.
d) Privatization could improve efficiency, but it might have an adverse effect on
employment.
a. b, c, d
b. a, b, c
c. a, b, d
d. All of the statements are correct.
Value Added Tax (VAT) and Personal Income tax are the largest contributors to tax
revenue; the former is regressive whilst the latter is progressive. The government
would use expansionary fiscal policy in times of a recession. See Chapter 3. The
arguments for privatization are provided in Box 3-1.
Question 9 Which of the following are the criteria for a good tax system?
Complete
Mark 1.00 out a. equality and administrative simplicity
of 1.00
b. equity, neutrality and administrative simplicity
Flag
question c. neutrality, transparency and equity
d. effectiveness, equity and transparency
A good tax system is comprised of the elements of equity (Fairness), neutrality and
administrative simplicity. See section 3.6 in the textbook.
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