Economics Paper 2, Nov/Dec. 2011  
Questions: 1 2 3 4 5 6 7 8 9 10 11 12 Main
General Commsents
Question 10

(a)        What is the difference between the following terms?
(i)         ad valorem tax and specific tax;
(ii)        a progressive tax and a regressive tax.

(b)        Give any three reasons why the government of your country imposes indirect taxes.


This question appeared to be unpopular with the candidates.  Most of the candidates who
 attempted this question scored average marks because they could not provide appropriate
answers for the (a) part of the question.  Candidates were expected to state the
following to score good marks for the (a) part of the question.

            (a)        (i)         An ad-volorem tax is expressed as a percentage of the value of an
                                    item while a specific tax is expressed as a fixed sum of money on
                                    unit of an item.
                        (ii)        A tax is regressive if the rate of tax falls as income rises.  On the
 other hand, a tax is progressive if the rate of tax increases as
income increases.

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