cHAPTER 4 _PART 1

Which of the following statements is correct about government budget policy

• Budget surplus is expansionary in nature and leads to an increase in aggregate demand

• Budget deficit means government expenditure is less than government revenue

• A balanced budget is suitable to correct inflation

• none of the above.

A surplus budget occurs when government expenditure are

• equal to revenues

• less than revenues

• greater than revenues

• none of the above.

Mary pays tax of RM400 on her income of RM7000, while Iris pays a tax of RM220 on her income of RM5000. This tax structure is

• constant

• progressive

• regressive

• proportional

The government controls the problem of inflation by imposing a surplus budget. This is done by ..................

• reducing sales tax and increasing expenditure

• reducing expenditure and income tax simultaneously

• reducing expenditure and increasing services tax

• none of the above

Which of the following examples is an indirect tax in Malaysia

• Petroleum revenue

• Corporate or business tax

• Capital gain tax

• Excise duties tax

A budget surplus can be achieved by ..............

• increasing government development expenditures

• increasing income taxes

• increasing government expenditure and decreasing taxation by the same amount

• open market operation

All of the following sources are non tax revenues except

• royalties from petroleum and natural gas

• receipts from licences, fees and permits

• reimbursements and contributions from government departments

• import duties and excise duties.

the two categories of government expenditure are .......

• economic expenditure and non economic expenditure

• operating expenditure and development expenditure

• public expenditure and private expenditure

• transaction expenditure and precautionary expenditure

the tax structure where the wealthy pay a smaller percentage of their income as tax compared to the poor is known as

• proportional tax

• progressive tax

• regressive tax

• flat tax

All of the following are sources of government revenue except

• corporate income tax

• transfer payment

• loans from world bank

• court fines