Download Do you know what price ceiling, price floor, quota, per

Market and Price
Q32 Do you know what price ceiling, price floor, quota, per-unit
tax and per-unit subsidy are?
Price ceiling
A maximum price (below the equilibrium level) set on an output.
Economic effects
Market price
↓
Quantity demanded
↑
Quantity supplied
↓
Quantity transacted
↓
Total revenue
↓
Market condition
A shortage results
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Economics in Minutes
Q59 What are the tools of monetary policy?
(i) Issuance of banknotes
Banknotes ↑
Cash in public
circulation ↑
Ms ↑
Excess
reserve ↑
Ms ↑
(ii) Minimum reserve ratio
Minimum
reserve ratio ↓
(iii)Open market operations
Open market operations refer to the purchase and sale of government bonds by
the central bank to regulate the money supply.
Central bank selling
bonds to the public
The cash flows
from the public to
the central bank
Ms ↓
Central bank buying
bonds from the public
The cash flows
from the central
bank to the public
Ms ↑
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Economics in Minutes
Q67 Can you classify taxes by tax rate?
◗ Progressive tax
Progressive tax is a tax in which the tax rate increases when the taxable income
increases.
◗ Proportional tax
Proportional tax is a tax in which the tax rate remains constant when the taxable
income increases.
Macroeconomic Problems and Policies
2. The following charts show the composition
of the General Revenue Account of the
government of an economy over two years.
應用小貼士
Do not confuse the
percentage of contribution of
a tax to total revenue with the
amount of tax revenue.
Based on the above data, which of the following are correct from year 1 to 2?
(1)Direct tax revenue has increased while indirect tax revenue has decreased.
(2)The ratio of indirect to direct tax revenue has decreased.
(3)The work incentive of the workforce is lower.
(4)The contribution of tax revenue to the total revenue of the government has
increased.
A.(1) and (2) only
B.(1) and (3) only
C.(2) and (4) only
D.(3) and (4) only
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Economics in Minutes
技巧速遞
Ans: C
(1)Incorrect. The amount of both direct and indirect tax revenue are not
known; only the relative share of each in the total government revenue
is known.
(2)Correct. As the relative share of direct tax revenue in the total
government revenue has increased, while that of indirect tax
revenue has decreased, the ratio of indirect to direct tax revenue has
decreased.
(3)Incorrect. Uncertain.
(4)Correct. The sum of the contribution of direct and indirect tax revenue
has increased from 34% + 35% = 69% to 30% + 45% = 75%.