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
    • For fair comparison
    • Because GDP needs padding

  5. Drivers keep buying almost as much fuel when prices rise, while sellers adjust more easily. Fuel duty rises. Who ends up paying most of it?

    • Drivers, who keep buying fuel
    • 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. Bread shoppers keep buying even when prices rise, while sellers adjust more easily. A minister says shops pay a new bread tax since they hand over the cash. What is the error?

    • Shops always pay every tax
    • Shoppers bear most of it
    • Bread is never taxed

  8. Concert buyers can walk away when prices rise, while venues cannot add seats. Bread buyers keep buying, while bakeries can bake more. 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. For fair comparison · 3 coins against 10 is heavy, against 1000 is light.
  5. Drivers, who keep buying fuel · Drivers adjust least here, so the price carries the tax to them.
  6. 30 · Divide 30 by 100: debt stands at 30 percent of GDP.
  7. Shoppers bear most of it · Who hands over cash differs from who truly bears the cost; bread shoppers adjust least, so they bear most of it.
  8. False · Venues adjust least in the ticket market, so sellers bear more of that tax. Bread buyers adjust least in their market, so the two taxes do not land the same way.
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