Taxes, Public Spending and the Government Budget · seed 1 · A4, ink-friendly. The answer key prints on its own page for grown-ups.

Who really pays a tax

Civics & Economics · Economics · ages 15-16
Name ______________________   Date ____________

  1. Every income pays a flat 10 percent. What kind is it?

    • Regressive
    • Progressive
    • Proportional, the same share from all

  2. Incomes of 100 and 1000 coins each pay a 10 coin tax. What kind is it?

    • Regressive, since 10 is a bigger share of 100
    • Progressive, since all pay coins
    • Proportional, since 10 equals 10

  3. What is the difference between a deficit and debt?

    • They are the same word
    • Deficit is the yearly gap, debt is the piled-up stock
    • Debt is the yearly gap, deficit the pile

  4. Why is debt quoted as a share of GDP?

    • To hide all numbers
    • So budgets of different sized economies compare fairly
    • Because GDP needs padding

  5. Fuel duty rises. Who ends up paying most of it?

    • Drivers, since inelastic demand keeps them buying at higher prices
    • Nobody, taxes vanish
    • Only the petrol stations, always

  6. A country has debt of 30 coins and GDP of 100. Type debt as a percent of GDP.

    Answer: ______________

  7. A minister says shops pay a new bread tax since they hand over the cash. What is the error?

    • Shops always pay every tax
    • Inelastic shoppers carry it through higher prices, whoever queues to pay
    • Bread is never taxed

  8. A tax on concert tickets falls mostly on buyers, just like a tax on bread.

    Circle one:   True   False

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Answer key

For grown-ups. Fold this page away before handing over the rest.

Who really pays a tax W1-mt_OEjK6v1-F0-s1

  1. Proportional, the same share from all · Equal shares from all incomes define proportional.
  2. Regressive, since 10 is a bigger share of 100 · Shares decide: 10 percent against 1 percent hits lower incomes harder.
  3. Deficit is the yearly gap, debt is the piled-up stock · Flow against stock: one year beside all years.
  4. So budgets of different sized economies compare fairly · 3 coins against 10 is heavy, against 1000 is light.
  5. Drivers, since inelastic demand keeps them buying at higher prices · Drivers cannot walk away, so the price carries the tax to them.
  6. 30 · Divide 30 by 100: debt stands at 30 percent of GDP.
  7. Inelastic shoppers carry it through higher prices, whoever queues to pay · Who hands over cash differs from who truly bears the cost.
  8. False · Stretchy demand lets buyers walk away, so sellers absorb more.
Worksheet · LightMySky