Q14 of 24 Page 1

State one fiscal measure that can be used to reduce the gap between rich and poor.


Taxation is an important fiscal measure that can be used to reduce the gap between the rich and the poor. Tax is the compulsory payment that has to be made to the government. A progressive system of taxation in which the people are taxed on the basis of their ability to a will help in reducing the income disparity. In such a system, the rich will be taxed more and the poor will be taxed less. This can be used to reduce the gap between the rich and the poor.


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12

Suppose the value of demand and supply curves of a Commodity-X is given by the following two equations simultaneously: Qd = 200 –10p Qs = 50 + 15p

i) Find the equilibrium price and equilibrium quantity of commodity X.


ii) Suppose that the price of a factor inputs used in producing the commodity has changed, resulting in the new supply curve given by the equation Qs’ = 100 + 15p Analyse the new equilibrium price and new equilibrium quantity as against the original equilibrium price and equilibrium quantity

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Define money supply

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Define the capital receipts of a government.

 16

From the following data calculate Fiscal Deficit: