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economics (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32798/unit-242-business-objectives-hl" title="Unit 2.4(2): Business objectives (HL)">Unit 2.4(2): Business objectives (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32663/unit-251-price-elasticity-of-demand-ped" title="Unit 2.5(1): Price elasticity of demand (PED)">Unit 2.5(1): Price elasticity of demand (PED)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32788/unit-252-income-elasticity-of-demand-yed-" title="Unit 2.5(2): Income elasticity of demand (YED) ">Unit 2.5(2): Income elasticity of demand (YED) </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32789/unit-26-price-elasticity-of-supply-pes-" title="Unit 2.6: Price elasticity of supply (PES) ">Unit 2.6: Price elasticity of supply (PES) </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/33388/unit-271-governments-in-markets-tax-and-subsidy-" title="Unit 2.7(1): Governments in markets - tax and subsidy ">Unit 2.7(1): Governments in markets - tax and subsidy </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/33424/unit-272-governments-in-markets-price-controls" title="Unit 2.7(2): Governments in markets - price controls">Unit 2.7(2): Governments in markets - price controls</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/33665/unit-281-market-failure-externalities" title="Unit 2.8(1): Market failure – externalities">Unit 2.8(1): Market failure – externalities</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/33808/unit-282-market-failure-merit-goods-and-demerit-goods-" title="Unit 2.8(2): Market failure - merit goods and demerit goods ">Unit 2.8(2): Market failure - merit goods and demerit goods </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34054/unit-283-government-intervention-to-manage-externalities-merit-a" title="Unit 2.8(3): Government intervention to manage externalities, merit and demerit goods ">Unit 2.8(3): Government intervention to manage externalities, merit and demerit goods </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34082/unit-284-common-access-pool-resources" title="Unit 2.8(4): Common access (pool) resources">Unit 2.8(4): Common access (pool) resources</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34087/unit-29-public-goods" title="Unit 2.9: Public goods">Unit 2.9: Public goods</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34247/unit-210-asymmetric-information-hl" title="Unit 2.10: Asymmetric information (HL)">Unit 2.10: Asymmetric information (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35118/unit-2111-market-power-theory-of-production-and-costs-hl" title="Unit 2.11(1) Market power - Theory of production and costs (HL)">Unit 2.11(1) Market power - Theory of production and costs (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35125/unit-2112-market-power-perfect-competitionhl" title="Unit 2.11(2) Market power - Perfect competition(HL)">Unit 2.11(2) Market power - Perfect competition(HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35147/unit-2113-market-power-monopolyhl" title="Unit 2.11(3) Market power - Monopoly(HL)">Unit 2.11(3) Market power - Monopoly(HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35151/unit-2114-market-power-monopolistic-competitionhl" title="Unit 2.11(4) Market power - Monopolistic competition(HL)">Unit 2.11(4) Market power - Monopolistic competition(HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35153/unit-2115-market-power-oligopolyhl" title="Unit 2.11(5) Market power - Oligopoly(HL)">Unit 2.11(5) Market power - Oligopoly(HL)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/41603/economics-real-world-examples-and-extension-material-" title="Economics real world examples and extension material ">Economics real world examples and extension material </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/43378/opportunity-cost-and-production-possibility-curves" title="Opportunity cost and production possibility curves">Opportunity cost and production possibility curves</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/42559/demand-theory" title="Demand theory">Demand theory</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/41886/the-price-mechanism" title="The price mechanism">The price mechanism</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/43188/market-demand-and-supply" title="Market demand and supply">Market demand and supply</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/41705/demerit-goods" title="Demerit goods">Demerit goods</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/42275/market-failure-and-climate-change" title="Market failure and climate change">Market failure and climate change</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/42925/market-power" title="Market power">Market power</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/42099/applying-game-theory" title="Applying game theory">Applying game theory</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34407/chapter-3-macroeconomics" title="Chapter 3: Macroeconomics">Chapter 3: Macroeconomics</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34355/unit-311-measuring-the-level-of-economic-activity" title="Unit 3.1(1): Measuring the level of economic activity">Unit 3.1(1): Measuring the level of economic activity</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34432/unit-312-measuring-economic-development" title="Unit 3.1(2): Measuring Economic Development">Unit 3.1(2): Measuring Economic Development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34485/unit-321-variations-in-economic-activity-aggregate-demand-ad-" title="Unit 3.2(1): Variations in economic activity - aggregate demand (AD) ">Unit 3.2(1): Variations in economic activity - aggregate demand (AD) </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34487/unit-322-variations-in-economic-activity-aggregate-supplyas" title="Unit 3.2(2): Variations in economic activity - aggregate supply(AS)">Unit 3.2(2): Variations in economic activity - aggregate supply(AS)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34758/unit-331-macroeconomic-objectives-economic-growth" title="Unit 3.3(1) Macroeconomic objectives: economic growth">Unit 3.3(1) Macroeconomic objectives: economic growth</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34771/unit-332-macroeconomic-objectives-unemployment-" title="Unit 3.3(2) Macroeconomic objectives: unemployment ">Unit 3.3(2) Macroeconomic objectives: unemployment </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34778/unit-333-macroeconomic-objectives-inflation-and-deflation-" title="Unit 3.3(3) Macroeconomic objectives: inflation and deflation ">Unit 3.3(3) Macroeconomic objectives: inflation and deflation </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34925/unit-341-economics-of-inequality-and-poverty" title="Unit 3.4(1) Economics of inequality and poverty">Unit 3.4(1) Economics of inequality and poverty</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34946/unit-342-policies-to-improve-equality-equity-and-poverty" title="Unit 3.4(2) Policies to improve equality, equity and poverty">Unit 3.4(2) Policies to improve equality, equity and poverty</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34993/unit-35-government-management-of-the-economy-monetary-policy" title="Unit 3.5 Government management of the economy – monetary policy">Unit 3.5 Government management of the economy – monetary policy</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34962/unit-36-government-management-of-the-economy-fiscal-policy" title="Unit 3.6 Government management of the economy – fiscal policy">Unit 3.6 Government management of the economy – fiscal policy</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35017/unit-371-market-based-supply-side-policies-" title="Unit 3.7(1) Market based supply-side policies ">Unit 3.7(1) Market based supply-side policies </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35018/unit-372-interventionist-supply-side-policies-" title="Unit 3.7(2) Interventionist supply-side policies ">Unit 3.7(2) Interventionist supply-side policies </a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/45803/economics-real-world-examples-and-extension-material-" title="Economics real world examples and extension material ">Economics real world examples and extension material </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/42639/measuring-economic-well-being" title="Measuring economic well-being">Measuring economic well-being</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/43044/inflation" title="Inflation">Inflation</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/42350/inequality" title="Inequality">Inequality</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/41639/inequity" title="Inequity">Inequity</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35414/chapter-4-the-global-economy" title="Chapter 4: The Global Economy">Chapter 4: The Global Economy</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35346/unit-41-benefits-of-international-trade" title="Unit 4.1 Benefits of international trade">Unit 4.1 Benefits of international trade</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35348/unit-4243-trade-protectionism" title="Unit 4.2/4.3 Trade protectionism">Unit 4.2/4.3 Trade protectionism</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35407/unit-44-economic-integration-" title="Unit 4.4 Economic integration ">Unit 4.4 Economic integration </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35409/unit-45-exchange-rates" title="Unit 4.5 Exchange rates">Unit 4.5 Exchange rates</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35413/unit-46-balance-of-payments-" title="Unit 4.6 Balance of payments ">Unit 4.6 Balance of payments </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35675/unit-47-sustainable-development" title="Unit 4.7 Sustainable development">Unit 4.7 Sustainable development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35685/unit-48-measuring-development-" title="Unit 4.8 Measuring development ">Unit 4.8 Measuring development </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35687/unit-49-barriers-to-economic-development" title="Unit 4.9 Barriers to economic development">Unit 4.9 Barriers to economic development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35702/unit-410-economic-growth-and-economic-development-strategies" title="Unit 4.10: Economic growth and economic development strategies">Unit 4.10: Economic growth and economic development strategies</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/45804/economics-real-world-examples-and-extension-material-" title="Economics real world examples and extension material ">Economics real world examples and extension material </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/41927/foreign-currency" title="Foreign currency">Foreign currency</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/43532/exchange-rates" title="Exchange rates">Exchange rates</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/43804/balance-of-payments" title="Balance of payments">Balance of payments</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/41796/economic-development" title="Economic development">Economic development</a></li></ul></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20132/units-1-2-microeconomics" title="Units 1-2: Microeconomics">Units 1-2: Microeconomics</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Unit 1: Introduction to economics">Unit 1: Introduction to economics</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20091/introductory-activity" title="Introductory activity">Introductory activity</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20093/unit-11-scarcity-choice-and-opportunity-cost" title="Unit 1.1: Scarcity, choice and opportunity cost">Unit 1.1: Scarcity, choice and opportunity cost</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21647/factors-of-production" title="Factors of production">Factors of production</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20114/economic-systems" title="Economic systems">Economic systems</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20134/public-and-private-sectors" title="Public and private sectors">Public and private sectors</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/28055/unit-12-economics-as-a-social-science" title="Unit 1.2: Economics as a social science">Unit 1.2: Economics as a social science</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29921/circular-flow-of-national-income" title="Circular flow of national income">Circular flow of national income</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29829/unit-1-review-terms" title="Unit 1: Review terms">Unit 1: Review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/41600/introduction-to-economics-crossword" title="Introduction to economics crossword">Introduction to economics crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/4331/unit-1-multiple-choice-quiz" title="Unit 1: Multiple choice quiz">Unit 1: Multiple choice quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20177/unit-21-23-competitive-markets-demand-and-supply" title="Unit 2.1-2.3: Competitive markets - demand and supply">Unit 2.1-2.3: Competitive markets - demand and supply</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/28517/unit-21-demand" title="Unit 2.1: Demand">Unit 2.1: Demand</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/22349/determinants-of-demand" title="Determinants of demand">Determinants of demand</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29949/unit-22-supply-" title="Unit 2.2: Supply ">Unit 2.2: Supply </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20184/changes-to-supply-and-demand-" title="Changes to supply and demand ">Changes to supply and demand </a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21992/practise-exercises" title="Practise exercises">Practise exercises</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/26112/gold-exchange-game-demand-and-supply" title="Gold exchange game: Demand and supply">Gold exchange game: Demand and supply</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20194/unit-23-competitive-market-equilibrium" title="Unit 2.3: Competitive market equilibrium">Unit 2.3: Competitive market equilibrium</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20144/producer-and-consumer-surplus" title="Producer and consumer surplus">Producer and consumer surplus</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/22351/veblen-goods-and-super-luxury-goods" title="Veblen goods and super luxury goods">Veblen goods and super luxury goods</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/25677/are-cryptocurrencies-the-new-tulipmania" title="Are Cryptocurrencies the new Tulipmania?">Are Cryptocurrencies the new Tulipmania?</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20472/unit-21-23-multiple-choice-quiz" title="Unit 2.1-2.3: Multiple choice quiz">Unit 2.1-2.3: Multiple choice quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20113/unit-24-consumer-and-producer-behaviour-hl-only" title="Unit 2.4: Consumer and producer behaviour (HL only)">Unit 2.4: Consumer and producer behaviour (HL only)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/36073/behavioural-economics-consumer-biases-nudge-theory-hl-only" title="Behavioural economics: Consumer biases / nudge theory (HL only)">Behavioural economics: Consumer biases / nudge theory (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20378/business-objectives-hl-only" title="Business objectives (HL only)">Business objectives (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/28741/unit-21-24-review-terms-" title="Unit 2.1-2.4: Review terms ">Unit 2.1-2.4: Review terms </a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20195/unit-25-26-elasticity" title="Unit 2.5-2.6: Elasticity">Unit 2.5-2.6: Elasticity</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/28713/unit-25-price-elasticity-of-demand" title="Unit 2.5: Price elasticity of demand">Unit 2.5: Price elasticity of demand</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21545/determinants-of-price-elasticity-" title="Determinants of price elasticity ">Determinants of price elasticity </a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21532/ped-elasticity-and-sales-revenue" title="PED elasticity and sales revenue?">PED elasticity and sales revenue?</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21259/unit-25-income-elasticity-of-demand-yed" title="Unit 2.5: Income elasticity of demand (YED)">Unit 2.5: Income elasticity of demand (YED)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21200/unit-26-price-elasticity-of-supply" title="Unit 2.6: Price elasticity of supply">Unit 2.6: Price elasticity of supply</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20207/perfectly-elastic-inelastic-supply-curves" title="Perfectly elastic / inelastic supply curves">Perfectly elastic / inelastic supply curves</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20230/a-mathematical-note-about-elasticity-" title="A mathematical note about elasticity ">A mathematical note about elasticity </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/39037/demand-and-supply-crossword" title="Demand and supply crossword">Demand and supply crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29021/unit-25-26-review-terms" title="Unit 2.5-2.6: Review terms">Unit 2.5-2.6: Review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20474/unit-25-26-multiple-choice-quiz-" title="Unit 2.5-2.6: Multiple choice quiz ">Unit 2.5-2.6: Multiple choice quiz </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/44474/unit-21-25-competitive-markets-quiz" title="Unit 2.1- 2.5: Competitive markets quiz">Unit 2.1- 2.5: Competitive markets quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20243/unit-27-the-role-of-government-in-microeconomics-" title="Unit 2.7: The role of government in microeconomics ">Unit 2.7: The role of government in microeconomics </a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/26590/indirect-taxation" title="Indirect taxation">Indirect taxation</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20246/ped-and-the-burden-of-tax-hl-only-" title="PED and the burden of tax (HL only) ">PED and the burden of tax (HL only) </a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20277/government-subsidies-" title="Government subsidies ">Government subsidies </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29117/unit-27-indirect-tax-and-subsidy-review-terms" title="Unit 2.7: Indirect tax and subsidy review terms">Unit 2.7: Indirect tax and subsidy review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20287/price-controls-maximum-price-" title="Price controls − maximum price ">Price controls − maximum price </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20288/minimum-price-" title="Minimum price ">Minimum price </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21540/minimum-wage-" title="Minimum wage ">Minimum wage </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/38849/labour-market-crossword" title="Labour market crossword">Labour market crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29260/unit-27-price-controls-review-terms" title="Unit 2.7: Price controls review terms">Unit 2.7: Price controls review terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20303/unit-28-210-market-failure-" title="Unit 2.8-2.10: Market failure ">Unit 2.8-2.10: Market failure </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21543/unit-28-merit-goods-" title="Unit 2.8: Merit goods ">Unit 2.8: Merit goods </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/23123/unit-28-demerit-goods-negative-externalities" title="Unit 2.8: Demerit goods / negative externalities">Unit 2.8: Demerit goods / negative externalities</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/38850/market-failure-crossword" title="Market failure crossword">Market failure crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29262/unit-29-economics-of-the-environment-and-public-goods-" title="Unit 2.9: Economics of the environment and public goods ">Unit 2.9: Economics of the environment and public goods </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20332/unit-210-asymmetric-information-hl-only" title="Unit 2.10: Asymmetric information (HL only)">Unit 2.10: Asymmetric information (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29828/unit-28-210-market-failure-review-sheet" title="Unit 2.8-2.10: Market failure review sheet">Unit 2.8-2.10: Market failure review sheet</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29827/unit-28-210-market-failure-review-terms" title="Unit 2.8-2.10: Market failure review terms">Unit 2.8-2.10: Market failure review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20479/unit-27-210-multiple-choice-quiz-" title="Unit 2.7-2.10: Multiple choice quiz ">Unit 2.7-2.10: Multiple choice quiz </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/44501/unit-27-210-government-failure-revision-quiz" title="Unit 2.7-2.10 Government failure revision quiz">Unit 2.7-2.10 Government failure revision quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20330/unit-211-market-power-hl-only" title="Unit 2.11: Market power (HL only)">Unit 2.11: Market power (HL only)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29835/assessment-map" title="Assessment map">Assessment map</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21528/production-hl-only" title="Production (HL only)">Production (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29978/revenue-theory-hl-only" title="Revenue theory (HL only)">Revenue theory (HL only)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20357/costs-of-production-hl-only" title="Costs of production (HL only)">Costs of production (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21286/economies-and-diseconomies-of-scale-hl-only" title="Economies and diseconomies of scale (HL only)">Economies and diseconomies of scale (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/22494/long-run-average-cost-curves-hl-only" title="Long run average cost curves (HL only)">Long run average cost curves (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29838/breakeven-hl-only" title="Breakeven (HL only)">Breakeven (HL only)</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20340/economic-profit-hl-only" title="Economic profit (HL only)">Economic profit (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/39082/market-power-crossword" title="Market power crossword">Market power crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/22495/revision-exercise-on-cost-and-revenue-hl-only" title="Revision exercise on cost and revenue (HL only)">Revision exercise on cost and revenue (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29845/unit-211-costs-revenue-and-profit-review-sheet-hl-only" title="Unit 2.11: Costs, revenue and profit review sheet (HL only)">Unit 2.11: Costs, revenue and profit review sheet (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/44484/unit-211-multiple-choice-quiz-sl-units" title="Unit 2.11: Multiple choice quiz (SL units)">Unit 2.11: Multiple choice quiz (SL units)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29846/market-structures-hl-only" title="Market structures (HL only)">Market structures (HL only)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29981/perfect-competition-hl-only" title="Perfect competition (HL only)">Perfect competition (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/24486/profit-in-perfect-competition-hl-only" title="Profit in perfect competition (HL only)">Profit in perfect competition (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21302/efficiency-in-perfect-competition-hl-only" title="Efficiency in perfect competition (HL only)">Efficiency in perfect competition (HL only)</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20430/monopoly-hl-only" title="Monopoly (HL only)">Monopoly (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/24529/profit-and-revenue-maximisation-in-monopoly-hl-only" title="Profit and revenue maximisation in monopoly (HL only)">Profit and revenue maximisation in monopoly (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21306/a-comparison-of-monopoly-and-perfect-competition-hl-only" title="A comparison of monopoly and perfect competition? (HL only)">A comparison of monopoly and perfect competition? (HL only)</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20435/monopolistic-competition-hl-only" title="Monopolistic competition (HL only)">Monopolistic competition (HL only)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20436/oligopoly-hl-only" title="Oligopoly (HL only)">Oligopoly (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/22310/game-theory-hl-only" title="Game theory (HL only)">Game theory (HL only)</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29918/unit-211-market-structures-review-sheet-hl-only" title="Unit 2.11: Market structures review sheet (HL only)">Unit 2.11: Market structures review sheet (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32337/unit-211-diagram-revision-" title="Unit 2.11: Diagram revision ">Unit 2.11: Diagram revision </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20480/unit-211-multiple-choice-quiz-hl-only" title="Unit 2.11: Multiple choice quiz (HL only)">Unit 2.11: Multiple choice quiz (HL only)</a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32425/unit-212-the-markets-inability-to-achieve-equity-hl-only" title="Unit 2.12: The market’s inability to achieve equity (HL only)">Unit 2.12: The market’s inability to achieve equity (HL only)</a></li></ul><li class="ancestor parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right fa-rotate-90"></i><a class="" href="https://www.student.thinkib.net/economics/page/21842/unit-3-macroeconomics-" title="Unit 3: Macroeconomics ">Unit 3: Macroeconomics </a></li><ul class="level-1 expanded"><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/3942/unit-31-measuring-economic-activity-and-illustrating-its-variati" title="Unit 3.1: Measuring economic activity and illustrating its variations">Unit 3.1: Measuring economic activity and illustrating its variations</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20558/calculating-national-income" title="Calculating national income">Calculating national income</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21297/gdp-gni-as-a-measure-of-living-standards" title="GDP / GNI as a measure of living standards">GDP / GNI as a measure of living standards</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20567/national-income-statistics" title="National income statistics">National income statistics</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21580/the-business-cycle" title="The business cycle">The business cycle</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29931/unit-31-economic-activity-review-sheet" title="Unit 3.1: Economic activity review sheet">Unit 3.1: Economic activity review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20592/unit-32-variations-in-economic-activityaggregate-demand-and-aggr" title="Unit 3.2: Variations in economic activity—aggregate demand and aggregate supply">Unit 3.2: Variations in economic activity—aggregate demand and aggregate supply</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29933/aggregate-demand-and-supply" title="Aggregate demand and supply">Aggregate demand and supply</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21582/components-of-aggregate-demand" title="Components of aggregate demand">Components of aggregate demand</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20634/equilibrium-in-macroeconomics-neo-classical-perspective" title="Equilibrium in macroeconomics (neo-classical perspective)">Equilibrium in macroeconomics (neo-classical perspective)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20439/equilibrium-in-macroeconomics-keynesian-perspective" title="Equilibrium in macroeconomics (keynesian perspective)">Equilibrium in macroeconomics (keynesian perspective)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21349/john-maynard-keynes" title="John Maynard Keynes">John Maynard Keynes</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20650/keynesian-v-free-market-debate-" title="Keynesian v free market debate ">Keynesian v free market debate </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21342/changes-in-the-long-run-aggregate-supply" title="Changes in the long run aggregate supply">Changes in the long run aggregate supply</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30055/unit-32-aggregate-demand-and-supply-review-sheet" title="Unit 3.2: Aggregate demand and supply review sheet">Unit 3.2: Aggregate demand and supply review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20610/unit-35-and-36-demand-management-fiscal-and-monetary-policy" title="Unit 3.5 and 3.6: Demand management - fiscal and monetary policy">Unit 3.5 and 3.6: Demand management - fiscal and monetary policy</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30058/government-budget" title="Government budget">Government budget</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21585/fiscal-policy-" title="Fiscal policy ">Fiscal policy </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21343/multiplier-hl-only" title="Multiplier (HL only)">Multiplier (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21795/monetary-policy-" title="Monetary policy ">Monetary policy </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30071/independent-central-banks" title="Independent central banks">Independent central banks</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30083/unit-35-and-36-review-sheet" title="Unit 3.5 and 3.6 review sheet">Unit 3.5 and 3.6 review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20615/unit-37-supply-side-policies" title="Unit 3.7: Supply side policies">Unit 3.7: Supply side policies</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20651/the-role-of-supply-side-policies" title="The role of supply side policies">The role of supply side policies</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20622/market-based-and-interventionist-supply-side-policies-" title="Market based and interventionist supply side policies ">Market based and interventionist supply side policies </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/39129/aggregate-demand-and-supply-crossword" title="Aggregate demand and supply crossword">Aggregate demand and supply crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30086/unit-37-review-sheet" title="Unit 3.7: Review sheet">Unit 3.7: Review sheet</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20755/unit-31-32-and-35-37-multiple-choice-quiz-" title="Unit 3.1-3.2 and 3.5-3.7: Multiple choice quiz ">Unit 3.1-3.2 and 3.5-3.7: Multiple choice quiz </a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/44522/unit-31-32-and-35-37-revision-quiz" title="Unit 3.1-3.2 and 3.5-3.7: Revision quiz">Unit 3.1-3.2 and 3.5-3.7: Revision quiz</a></li><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20686/unit-33-macroeconomic-objectives" title="Unit 3.3: Macroeconomic objectives">Unit 3.3: Macroeconomic objectives</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30118/unemployment" title="Unemployment">Unemployment</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21351/types-of-unemployment" title="Types of unemployment?">Types of unemployment?</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21593/equilibrium-unemployment-" title="Equilibrium unemployment ">Equilibrium unemployment </a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21594/disequilibrium-unemployment" title="Disequilibrium unemployment">Disequilibrium unemployment</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30458/unemployment-review-sheet" title="Unemployment review sheet">Unemployment review sheet</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20713/inflation-" title="Inflation ">Inflation </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20712/measuring-inflation-hl-only" title="Measuring inflation (HL only)">Measuring inflation (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20685/costs-of-inflation-and-deflation" title="Costs of inflation and deflation">Costs of inflation and deflation</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30465/inflation-review-sheet" title="Inflation review sheet">Inflation review sheet</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20716/unemployment-v-inflation-trade-off-hl-only" title="Unemployment v inflation trade off (HL only)">Unemployment v inflation trade off (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/39133/macroeconomic-objectives-crossword" title="Macroeconomic objectives crossword">Macroeconomic objectives crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/44511/unit-33-macroeconomic-indicators-revision-quiz" title="Unit 3.3: Macroeconomic indicators revision quiz">Unit 3.3: Macroeconomic indicators revision quiz</a></li></ul><li class="ancestor parent" style="padding-left: 14px"><i class="expander fa fa-caret-right fa-rotate-90"></i><a class="" href="https://www.student.thinkib.net/economics/page/20741/unit-34-economics-of-inequality-and-poverty" title="Unit 3.4: Economics of inequality and poverty">Unit 3.4: Economics of inequality and poverty</a></li><ul class="level-2 expanded"><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32398/inequality" title="Inequality">Inequality</a></li><li class="current" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21356/the-role-of-spending-and-taxation-on-inequality-" title="The role of spending and taxation on inequality ">The role of spending and taxation on inequality </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21313/consequences-of-economic-growth" title="Consequences of economic growth">Consequences of economic growth</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30257/economic-growth-and-inequality-review-sheet" title="Economic growth and inequality review sheet">Economic growth and inequality review sheet</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20756/unit-33-34-multiple-choice-" title="Unit 3.3-3.4: Multiple choice ">Unit 3.3-3.4: Multiple choice </a></li></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21844/unit-4-global-economy" title="Unit 4: Global economy">Unit 4: Global economy</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21367/unit-41-benefits-of-international-trade" title="Unit 4.1: Benefits of international trade">Unit 4.1: Benefits of international trade</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30529/benefits-of-international-trade" title="Benefits of international trade">Benefits of international trade</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20823/absolute-and-comparative-advantage-hl-only" title="Absolute and comparative advantage (HL only)">Absolute and comparative advantage (HL only)</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20845/unit-42-43-trade-protection" title="Unit 4.2-4.3: Trade protection">Unit 4.2-4.3: Trade protection</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32419/barriers-to-trade-calculations-are-hl-only" title="Barriers to trade (calculations are HL only)">Barriers to trade (calculations are HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21610/case-study-on-tata-steel" title="Case study on Tata Steel">Case study on Tata Steel</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/23455/the-defence-industry" title="The Defence industry">The Defence industry</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30610/unit-41-43-review-sheet" title="Unit 4.1-4.3: Review sheet">Unit 4.1-4.3: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20894/unit-44-economic-integration-" title="Unit 4.4: Economic integration ">Unit 4.4: Economic integration </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30634/economic-integration-some-hl-tasks" title="Economic integration (some HL tasks)">Economic integration (some HL tasks)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20840/world-trade-organisation-wto" title="World trade organisation (WTO)">World trade organisation (WTO)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30635/unit-44-review-sheet" title="Unit 4.4: Review sheet">Unit 4.4: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20853/unit-45-exchange-rates" title="Unit 4.5: Exchange rates">Unit 4.5: Exchange rates</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30611/floating-exchange-rates" title="Floating exchange rates">Floating exchange rates</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/31824/fixed-managed-exchange-rate-systems-some-hl-tasks" title="Fixed / managed exchange rate systems (some HL tasks)">Fixed / managed exchange rate systems (some HL tasks)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21624/the-market-for-foreign-exchange" title="The market for foreign exchange">The market for foreign exchange</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30614/unit-45-review-sheet" title="Unit 4.5: Review sheet">Unit 4.5: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20859/unit-46-balance-of-payments" title="Unit 4.6: Balance of payments">Unit 4.6: Balance of payments</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30624/balance-of-payments-" title="Balance of payments ">Balance of payments </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21386/current-account-hl-only" title="Current account (HL only)">Current account (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20872/the-marshall-lerner-condition-j-curve-hl-only" title="The Marshall-Lerner condition / J curve (HL only)">The Marshall-Lerner condition / J curve (HL only)</a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20899/units-41-46-multiple-choice-quiz-" title="Units 4.1-4.6: Multiple choice quiz ">Units 4.1-4.6: Multiple choice quiz </a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/42989/unit-41-46-multiple-choice-quiz-ii" title="Unit 4.1-4.6: Multiple choice quiz II">Unit 4.1-4.6: Multiple choice quiz II</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/39438/unit-41-46-international-trade-crossword" title="Unit 4.1-4.6: International trade crossword">Unit 4.1-4.6: International trade crossword</a></li><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32423/unit-47-sustainable-development-" title="Unit 4.7: Sustainable development ">Unit 4.7: Sustainable development </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/26092/water-scarcity-activity" title="Water scarcity activity">Water scarcity activity</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32426/sustainable-development" title="Sustainable development">Sustainable development</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20928/unit-48-measuring-development-" title="Unit 4.8: Measuring development ">Unit 4.8: Measuring development </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30686/measuring-development" title="Measuring development">Measuring development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21627/economic-development-" title="Economic development ">Economic development </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30679/unit-47-48-review-sheet" title="Unit 4.7-4.8: Review sheet">Unit 4.7-4.8: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Unit 4.9: Barriers to development">Unit 4.9: Barriers to development</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30727/barriers-to-development-in-international-trade" title="Barriers to development in International trade">Barriers to development in International trade</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32430/unit-410-economic-growth-andor-economic-development-strategies" title="Unit 4.10: Economic growth and/or economic development strategies">Unit 4.10: Economic growth and/or economic development strategies</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30687/the-role-of-domestic-factors" title="The role of domestic factors">The role of domestic factors</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30688/the-role-of-international-trade-and-development" title="The role of international trade and development">The role of international trade and development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30689/the-role-of-foreign-direct-investment-fdi" title="The role of foreign direct investment (FDI)">The role of foreign direct investment (FDI)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/25240/the-role-of-foreign-aid-" title="The role of foreign aid ">The role of foreign aid </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30819/multilateral-development-assistance" title="Multilateral development assistance">Multilateral development assistance</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21632/the-role-of-international-debt" title="The role of international debt">The role of international debt</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/25242/the-balance-between-markets-and-intervention" title="The balance between markets and intervention">The balance between markets and intervention</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30926/unit-49-410-review-sheet" title="Unit 4.9 - 4.10: Review sheet">Unit 4.9 - 4.10: Review sheet</a></li></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21380/assessment" title="Assessment">Assessment</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Internal assessment ">Internal assessment </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20608/how-to-write-your-ia-student-handout" title="How to write your IA? (student handout)">How to write your IA? (student handout)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21428/how-to-interpret-the-assessment-criteria" title="How to interpret the assessment criteria?">How to interpret the assessment criteria?</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Grading practise ">Grading practise </a></li><ul class="level-3 "><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Sample 3a">Sample 3a</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32083/sample-3b" title="Sample 3b">Sample 3b</a></li></ul></ul></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32022/assessment-markbands" title="Assessment markbands">Assessment markbands</a></li></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/4332/exam-style-questions" title="Exam style questions">Exam style questions</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Paper 1 style examination questions">Paper 1 style examination questions</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/40100/unit-211-212-questions" title="Unit 2.11-2.12 questions">Unit 2.11-2.12 questions</a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/45102/paper-1-guidance-on-essay-writing" title="Paper 1 guidance on essay writing">Paper 1 guidance on essay writing</a></li></ul></ul></nav> </div> </div> </div> </div><div style="margin-top: 20px;"><style type="text/css">
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<div id="main-column" class="span9"> <article id="the-role-of-spending-and-taxation-on-inequality-" style="margin-top: 16px;">
<h1 class="section-title">The role of spending and taxation on inequality </h1>
<ul class="breadcrumb"><li><a title="Home" href="https://www.student.thinkib.net/economics"><i class="fa fa-home"></i></a><span class="divider">/</span></li><li><span class="gray">Unit 3: Macroeconomics </span><span class="divider">/</span></li><li><a title="Go to: Unit 3.4: Economics of inequality and poverty" href="https://www.student.thinkib.net/economics/page/20741/unit-34-economics-of-inequality-and-poverty">Unit 3.4: Economics of inequality and poverty</a><span class="divider">/</span></li><li><span class="active">The role of spending and taxation on inequality </span></li></ul>
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<h2><img alt="" src="/media/ib/economics/images/micro-economics-2/download-(1)(1).jpg" style="width: 320px; height: 239px; float: left;" title="//www.commonfloor.com" />Introduction</h2><p>This lesson continues to focus on the level of income inequality within a country, focusing on the role that progressive taxes play in reducing the level of inequality in the economy. This is a good opportunity to discuss some of the strengths and weaknesses of progressive and regressive tax systems. One of the advantages of a progressive tax system is that the burden of tax falls heaviest on high income earners. This means that governments with high progressive tax regimes will generally also have lower levels of income inequality.</p><hr class="hidden" /><div class="blueBg"><p><strong>Lesson time: </strong>90 minutes</p><p><strong><img alt="" src="/media/ib/economics/images/macro-economics-2/ak263880e7_411f_43c9_82fc_6853e77d6bea.jpg" style="width: 320px; height: 251px; float: right;" />Lesson objectives: </strong></p><p>Distinguish between progressive, regressive and proportional taxation, providing examples of each. Explain that direct taxes may be used as a mechanism to redistribute income.</p><p>Calculate the marginal rate of tax and the average rate of tax from a set of data. (HL only)</p><p>Evaluate government policies to promote equity (taxation, government expenditure and transfer payments) in terms of their potential positive or negative effects on efficiency in the allocation of resources.</p><p>Explain the term transfer payments, and provide examples, including old age pensions, unemployment benefits and child allowances.</p><p><strong>Teacher notes:</strong></p><section class="tib-hiddenbox"><p><span style="color:#FF0000;"><strong>1. Beginning activity</strong> - start with the opening question on tax evasion and take 5 minutes to discuss the implications of this.</span></p><p><span style="color:#FF0000;"><strong>2</strong>. <strong>Processes - technical vocabulary </strong>-<strong> </strong>students can learn the content watching the videos, reading the key terms and then completing each of the activities on this page<span style="color:#FF0000;">. </span></span></p><p><span style="color:#FF0000;"><strong>3. Applying the theory</strong></span> <span style="color:#FF0000;">- activity 2 and 3 focuses on the effectiveness of the role of taxation on income distribution. (10 minutes)</span></p><p><span style="color:#FF0000;"><strong>4. More application of theory</strong></span> <span style="color:#FF0000;">- activity 4 and 5 are HL only activities and require students to use the theory to calculate the tax paid by different income earners. (15 minutes)</span></p><p><span style="color:#FF0000;"><strong>5. Developing the theory </strong>- activity 6 and 7 begins the second part of this lesson, on the issue of fairness. Just because progressive tax systems place a larger burden on the rich does this really make them fairer? What are strengths and weaknesses of progressive tax systems. Activity 6 is best completed as a class discussion rather than completed individually. (15 minutes)</span></p><p><span style="color:#FF0000;"><strong>6. Applying the theory </strong>- activity 8 develops this argument further and considers the difficulties governments face in trying to raise further taxes on the wealthiest individuals and corporations in a global world. (15 minutes) </span></p><p><span style="color:#FF0000;"><strong>7. TOK exercise </strong>- activity 9, should we be able to choose how are taxes are spent? (10 minutes)</span></p><p><span style="color:#FF0000;"><strong>8. Reinforcement exercises </strong>- activity 10</span></p><p><span style="color:#FF0000;"><strong>9. </strong></span><span style="color:#FF0000;"><strong>Reflection</strong> <strong>activity </strong>- c</span><strong><span style="color:#FF0000;"></span></strong><span style="color:#FF0000;"><span style="color:#FF0000;">ontains an example of a paper one type question, which you can either print off or project onto the whiteboard. Allocate 10 minutes for this activity. </span></span></p></section></div><div class="greenBg"><h4><em><strong>Key terms:</strong></em></h4><p><strong>Progressive taxation </strong>- a tax where the burden paid increases as a households income rises. It means that the higher the wage a person earns, the higher their average rate of tax is.</p><p><strong>Regressive taxation </strong>- a tax where the burden paid falls as a households income rises. Regressive taxes take a larger percentage of individuals on low <wbr />incomes than individuals on higher incomes.</p><p><strong>Proportional taxes</strong> - taxes where the burden falls equally on both low and high income households. Proportional taxes will apply the same % tax burden, regardless of the level of income earned.</p><p><strong>Transfer payments</strong> - payments made by governments in the form of welfare benefits and public subsidies for which no money, goods, or services are received. </p><p><strong>Universal basic income </strong>-<strong> </strong>a governmental public program for a periodic payment delivered to all on an individual basis without means test or work requirement. The income provided would be unconditional, automatic, non-withdrawable, paid on an individual basis and delivered as a right.</p></div><p>The activities on this page are available as a handout at: <a href="/media/ib/economics/files/economic-indicators/role-of-governments-in-reducing-y-inequality.pdf" target="_blank" title="Student handouts"><img class="ico" src="https://assets.inthinking.net/thinkib/icons/student-handout.png" /> Role of spending and taxes on equality</a> </p><div class="greenBg"><h5>Beginning question</h5><p>Estimate how much money do you think is currently deposited in off shore bank accounts, used as a way of avoiding paying tax? Explain the implications of this for governments trying to use taxation to fund a fairer society?</p><section class="tib-hiddenbox"><div><p><span style="color:#FF0000;">A report for the BBC claims that the figure could be $ 21tn - just under a quarter of the total world income in 2018. This number could almost certainly make an enormous difference to many governments but makes many reticent about imposing high taxes on their wealthiest citizens for fear that they will simply move their money off shore. </span></p></div></section></div><div class="pinkBg"><h4><strong>Activity 1: </strong>The impact of taxation on income inequality in the USA</h4><p>Watch the following youtube video, from economist David Weissel, on the impact of taxation on income inequality in the USA. After watching the video read explain the extent to which progressive taxes and transfer payments by governments contribute to a more equal distribution of income.</p><p style="text-align: center;"><iframe allowfullscreen="" frameborder="0" height="360" src="//www.youtube.com/embed/7fgtE-AJs-A" width="640"></iframe></p><section class="tib-hiddenbox"><p><span style="color:#FF0000;">Progressive taxes such as income and corporation tax certainly contribute towards a more equal society, though vast inequalities still remain within many nations. This is because the burden of progressive taxation falls disproportionately on the wealthiest households, while more recipients of transfer payments tend to be poor - out of work benefits, child credits, pension e.t.c.</span></p></section></div><p>For an interesting take on this question why not read the following article appropriately named: <a href="/media/ib/economics/files/macro-economics/how-to-legally-scam-welfare.pdf" target="_blank" title="TOK"><img class="ico" src="https://assets.inthinking.net/thinkib/icons/tok.png" /> How to legally scam welfare?</a> </p><div><div class="pinkBg"><h4><strong>Activity 2: Types of taxation</strong></h4><p>Complete the following table:</p><table border="1" cellpadding="0" cellspacing="0"><tbody><tr><td style="width:154px;"><p style="text-align: center;"><strong>Type of tax</strong></p></td><td style="width:154px;"><p style="text-align: center;"><strong>Progressive</strong></p></td><td style="width:154px;"><p style="text-align: center;"><strong>Proportional</strong></p></td><td style="width:154px;"><p style="text-align: center;"><strong>Regressive</strong></p></td></tr><tr><td style="width:154px;"><p style="text-align: center;">Sales tax</p></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"><span style="color:#FF0000;">√</span></p></section></td></tr><tr><td style="width:154px;"><p style="text-align: center;">Income tax</p></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"><span style="color:#FF0000;">√</span></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td></tr><tr><td style="width:154px;"><p style="text-align: center;">Corporation tax</p></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"><span style="color:#FF0000;">√</span></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td></tr><tr><td style="width:154px;"><p style="text-align: center;">Property tax (flat rate)</p></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"><span style="color:#FF0000;">√</span></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td></tr><tr><td style="width:154px;"><p style="text-align: center;">Duty on cigarettes and alcohol</p></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"><span style="color:#FF0000;">√</span><br /> </p></section></td></tr><tr><td style="width:154px;"><p style="text-align: center;">Fuel / petrol taxes</p></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"><span style="color:#FF0000;">√</span></p></section></td></tr><tr><td style="width:154px;"><p style="text-align: center;">Per capita taxes</p></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"><span style="color:#FF0000;">√</span></p></section></td></tr><tr><td style="width:154px;"><p style="text-align: center;">Luxury taxes e.g. on second homes</p></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"><span style="color:#FF0000;">√</span></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td></tr><tr><td style="width:154px;"><p style="text-align: center;">Capital gains tax</p></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"><span style="color:#FF0000;">√</span></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td><td style="width:154px;"><section class="tib-hiddenbox"><p style="text-align: center;"></p></section></td></tr></tbody></table></div></div><div><div class="pinkBg"><h4><strong>Activity 3: </strong>Progressive v regressive taxation systems</h4><p>A government is considering switching its tax revenue base from a progressive to a regressive taxation system. As part of this the government wishes to reduce income tax rates and corporation tax rates. The main plank of this will be a reduction in the top rate of income tax from the current 60% to 45%. Instead they will raise sales taxes, especially on demerit goods such as alcohol, petrol and tobacco products.</p><p>Outline arguments in support and against this policy. Consider a range of stakeholders in your response.</p></div></div><section><section class="tib-hiddenbox"><p><span style="color:#FF0000;">There are two main arguments in support of the change in policy. Firstly, regressive taxes such as sales tax do not discourage hard work and enterprise. Unlike progressive taxes, where the more that an individual works and the higher wage that they earn, the more that an individual pays in tax, under regressive tax systems hard work and success are not penalised. </span></p><p><span style="color:#FF0000;">Secondly, sales taxes enable the consumer to choose whether to purchase the good or service or not and hence whether to pay tax or not? Sales taxes are probably also easier to collect than income and corporation taxes.</span></p><p><span style="color:#FF0000;">The disadvantage of this change in policy is that regressive tax systems are unfair in the sense that the burden falls heaviest on low income households. Is this fair?</span></p></section><div class="pinkBg"><h4><strong>Activity 4: How does a marginal tax system work? (HL only)</strong></h4><p>The following table includes income tax rates in a range of countries:</p><table border="1" cellpadding="0" cellspacing="0"><tbody><tr><td style="width:307px;"><p style="text-align: center;"><strong>Country</strong></p></td><td style="width:307px;"><p style="text-align: center;"><strong>Income tax rate (highest income earners)</strong></p></td></tr><tr><td style="width:307px;"><p style="text-align: center;">Belgium</p></td><td style="width:307px;"><p style="text-align: center;">64%</p></td></tr><tr><td style="width:307px;"><p style="text-align: center;">Sweden</p></td><td style="width:307px;"><p style="text-align: center;">60%</p></td></tr><tr><td style="width:307px;"><p style="text-align: center;">USA</p></td><td style="width:307px;"><p style="text-align: center;">55%</p></td></tr><tr><td style="width:307px;"><p style="text-align: center;">Russia</p></td><td style="width:307px;"><p style="text-align: center;">38%</p></td></tr><tr><td style="width:307px;"><p style="text-align: center;">Turkey</p></td><td style="width:307px;"><p style="text-align: center;">35%</p></td></tr><tr><td style="width:307px;"><p style="text-align: center;">Czech Republic</p></td><td style="width:307px;"><p style="text-align: center;">22%</p></td></tr><tr><td style="width:307px;"><p style="text-align: center;">Bulgaria</p></td><td style="width:307px;"><p style="text-align: center;">10%</p></td></tr><tr><td style="width:307px;"><p style="text-align: center;">Saudi Arabia</p></td><td style="width:307px;"><p style="text-align: center;">2.5%</p></td></tr><tr><td style="width:307px;"><p style="text-align: center;">UAE</p></td><td style="width:307px;"><p style="text-align: center;">0%</p></td></tr></tbody></table></div></section><div><div class="blueBg"><p><strong>Does this mean that residents of Belgium and Sweden lose more than half incomes in tax? </strong></p><p>In reality they do not. This is because most countries use a marginal taxation system so that the tax rate gets progressively higher the more you own. Therefore, in reality wealthy residents only pay 60 or 64% on the highest part of their incomes. The following table, showing the tax rates in Sweden illustrates this:</p><table border="1" cellpadding="0" cellspacing="0"><tbody><tr><td style="width:205px;"><p style="text-align: center;"><strong>Yearly income earned (US $)</strong></p></td><td style="width:205px;"><p style="text-align: center;"><strong>Marginal tax rate</strong></p></td></tr><tr><td style="width:205px;"><p style="text-align: center;">Up to $ 2,690</p></td><td style="width:205px;"><p style="text-align: center;">0%</p></td></tr><tr><td style="width:205px;"><p style="text-align: center;">$ 2,690 - $ 62,140</p></td><td style="width:205px;"><p style="text-align: center;">31%</p></td></tr><tr><td style="width:205px;"><p style="text-align: center;">$ 62,140 – $ 88,130</p></td><td style="width:205px;"><p style="text-align: center;">51 %</p></td></tr><tr><td style="width:205px;"><p style="text-align: center;">Over $ 88,130</p></td><td style="width:205px;"><p style="text-align: center;">56 %</p></td></tr></tbody></table><p>This means that an individual lucky enough to be earning $ 100,000 per year in Sweden will actually pay a tax rate of 38.34%</p><p><strong>This is calculated by:</strong></p><p>(0% x $ 2,690) + (31% x $ 59,450) + (51% x $ 25,990) + (56% x $ 11,870) which comes to $ 38,331.6 in income tax or a total tax rate of 38.34%</p><p><strong>How much would an individual pay in tax if they earned an income of $ 50,000?</strong></p><section><section class="tib-hiddenbox"><p><span style="color:#FF0000;">(0% x $ 2,690) + (31% x $ 47,310) = $ 14,666</span></p></section></section></div></div><div class="pinkBg"><h4><strong>Activity 5: A comparison of two tax systems (HL only)</strong></h4><p>Two nations, Turkey and Germany have the following income tax rates:</p><table border="3" cellpadding="0" cellspacing="0"><tbody><tr><td style="text-align: center;"><strong>Level of income per year (Eur)</strong></td><td style="text-align: center;"><strong>Germany %</strong></td><td style="text-align: center;"><strong>Turkey %</strong></td></tr><tr><td style="text-align: center;">up to 8,653</td><td style="text-align: center;">5.5</td><td style="text-align: center;">35</td></tr><tr><td style="text-align: center;">8,654 - 53,665</td><td style="text-align: center;">19.5</td><td style="text-align: center;">35</td></tr><tr><td style="text-align: center;">53,665 to 254,446</td><td style="text-align: center;">42</td><td style="text-align: center;">35</td></tr><tr><td style="text-align: center;">over 254,446</td><td style="text-align: center;">45</td><td style="text-align: center;">35</td></tr></tbody></table><p>1. To what extent are the taxation systems of Germany and Turkey progressive?</p><section class="tib-hiddenbox"><p><span style="color:#FF0000;">Germany's income tax system is progressive, Turkey's is proportional.</span></p></section><p>2. Outline the level of income tax paid by the citizens of the two countries at the following income levels?</p><table border="3" cellpadding="0" cellspacing="0"><tbody><tr><td style="text-align: center;"><strong>Level of income per year (EUR)</strong></td><td style="text-align: center;"><strong>Germany </strong></td><td style="text-align: center;"><strong>Turkey </strong></td></tr><tr><td style="text-align: center;">12,500</td><td><section class="tib-hiddenbox"><p>(8,653 x 5.5%) + (3,847 x 19.5%) = <span style="color:#FF0000;"> <span style="font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); display: inline ! important; float: none;">€</span> 1,226</span></p></section></td><td><section class="tib-hiddenbox"><p style="text-align: center;"><span style="color:#FF0000;"><span style="font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); display: inline ! important; float: none;">12,500 € x 35% =</span> 4,375</span></p></section></td></tr><tr><td style="text-align: center;">25,000</td><td><section class="tib-hiddenbox"><p>(8,653 x 5.5%) + (16,347 x 19.5%) = <span style="color:#FF0000;"> <span style="font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); display: inline ! important; float: none;">€</span> 3,664</span></p></section></td><td><section class="tib-hiddenbox"><p style="text-align: center;"><span style="color:#FF0000;"><span style="font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); display: inline ! important; float: none;">25,000 € x 35% = €</span> 8,750</span></p></section></td></tr><tr><td style="text-align: center;">75,000</td><td><section class="tib-hiddenbox"><p>(8,653 x 5.5%) + (45,012 x 19.5%) + (21,335 x 42%) = <span style="color:#FF0000;"> <span style="font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); display: inline ! important; float: none;">€</span> 18,214</span></p></section></td><td><section class="tib-hiddenbox"><p style="text-align: center;"><span style="color:#FF0000;"><span style="font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); display: inline ! important; float: none;">75,000 € x 35% = €</span> 26,250</span></p></section></td></tr><tr><td style="text-align: center;">150,000</td><td><section class="tib-hiddenbox"><p>(8,653 x 5.5%) + (45,012 x 19.5%) + (96,335 x 42%) = <span style="color:#FF0000;"> <span style="font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); display: inline ! important; float: none;">€</span> 49,714</span></p></section></td><td><section class="tib-hiddenbox"><p style="text-align: center;"><span style="color:#FF0000;"><span style="font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); display: inline ! important; float: none;">150,000 € x 35% = €</span> 52,500</span></p></section></td></tr><tr><td style="text-align: center;">250,000</td><td><section class="tib-hiddenbox"><p>(8,653 x 5.5%) + (45,012 x 19.5) + (196,335 x 42%) =<span style="color:#FF0000;"> <span style="font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); display: inline ! important; float: none;">€</span> 91,714</span></p></section></td><td><section class="tib-hiddenbox"><p style="text-align: center;"><span style="color:#FF0000;"><span style="font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); display: inline ! important; float: none;">250,000 € x 35% = €</span> 87,500</span></p></section></td></tr><tr><td style="text-align: center;">400,000</td><td><section class="tib-hiddenbox"><p>(8,653 x 5.5%) + (45,012 x 19.5) + (200,781 x 42%) + (145,554 x 45%) = <span style="color:#FF0000;"> <span style="font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); display: inline ! important; float: none;">€</span> 159,081</span></p></section></td><td><section class="tib-hiddenbox"><p style="text-align: center;"><span style="color:#FF0000;"><span style="font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); display: inline ! important; float: none;">400,000 € x 35% = €</span> 140,000</span></p></section></td></tr></tbody></table><p>3. Outline one advantage of the tax system of both nations?</p><section class="tib-hiddenbox"><p><span style="color:#FF0000;">Germany of course has the 'fairer' progressive tax system which means that the income paid is dependant on the income that a person earns. This system taxes wealthy households progressively more and reduces the level of income inequality in the economy - as stated in earlier sections of the site.</span></p><p><span style="color:#FF0000;">By contrast the more proportional Turkish tax system provides individuals with a greater incentive to work harder as they get to keep a larger share of what they earn - at high rates of income. For example a young family that is considering taking on a second job might be discouraged from doing so under the German system - if the second job increased their wage to a level were a higher rate of income tax had to be paid.</span></p></section></div><div class="pinkBg"><h4><strong>Activity 6: So is progressive taxation fairer?</strong></h4><p>Watch the following short video and then decide for yourself.</p><p style="text-align: center;"><iframe allowfullscreen="" frameborder="0" height="360" src="//www.youtube.com/embed/S6HEH23W_bM" width="640"></iframe></p><section class="tib-hiddenbox"><p><span style="color:#FF0000;">The answer to this question depends entirely on an individuals perception of fair? On one hand it could be argued that progressive tax systems on income are entirely fair. This is because the amount of tax paid depends on someone's ability to pay. Individuals with little or no income would pay no tax. </span></p><p><span style="color:#FF0000;">On the other hand some economists disagree with this assertion and state instead that all individuals should pay the same amount of tax. After all, why should a hard working and successful person pay more tax simply to subsidise payments for low income households, who may be making little attempt to find work themselves. </span></p><p><span style="color:#FF0000;">Of course this assertion makes the assumption that all wealthy people are hard working and similarly all those on low incomes are lazy and choose not to work - a statement that is clearly untrue</span></p></section></div><div class="pinkBg"><h4><strong>Activity 7: Different tax rates across the world</strong></h4><p>The following table illustrates income tax and sales tax rates rates for a number of nations:</p><table border="2" cellpadding="0" cellspacing="0"><tbody><tr><td style="text-align: center;"><strong>Country</strong></td><td style="text-align: center;"><strong>Income tax rate (average wage earners)</strong></td><td style="text-align: center;"><strong>Tax rate (high earners)</strong></td><td style="text-align: center;"><strong>Sales tax</strong></td></tr><tr><td style="text-align: center;">Belgium</td><td style="text-align: center;">42.80%</td><td style="text-align: center;">40.40%</td><td style="text-align: center;">21%</td></tr><tr><td style="text-align: center;">Germany</td><td style="text-align: center;">39.90%</td><td style="text-align: center;">39.90%</td><td style="text-align: center;">17.5%</td></tr><tr><td style="text-align: center;">UK</td><td style="text-align: center;">24.90%</td><td style="text-align: center;">43.72%</td><td style="text-align: center;">8 - 20%</td></tr><tr><td style="text-align: center;">USA</td><td style="text-align: center;">22.70%</td><td style="text-align: center;">40.55%</td><td style="text-align: center;">6 - 12%</td></tr><tr><td style="text-align: center;">Mexico</td><td style="text-align: center;">9.5%</td><td style="text-align: center;">29.40%</td><td style="text-align: center;">16%</td></tr><tr><td style="text-align: center;">Saudi Arabia</td><td style="text-align: center;">0%</td><td style="text-align: center;">3.14%</td><td style="text-align: center;">5%</td></tr></tbody></table><p>Source: <a href="//www.bbc.com/news/magazine-26327114">//www.bbc.com/news/magazine-26327114</a></p><p>a. Explain why there might be significant variations between income and sales tax rates between different countries?</p><section class="tib-hiddenbox"><p><span style="color:#FF0000;">In a lot of the European countries tax rates and social security contributions are high but the provision of benefits by the state tends to be very generous compared to countries in other parts of the world. If you fall ill or become unemployed the state will contribute and there are also generous pension arrangements. </span></p></section><p>b. What are the advantages and disadvantages of governments collecting tax revenue from sales tax rather than income tax? Explain your answer from the viewpoint of both high income earners as well as from the viewpoint of those on lower incomes.</p><section class="tib-hiddenbox"><p><span style="color:#FF0000;">Countries will make individual decisions on how to collect taxes. The advantage of using sales tax as a method of collecting taxes is that they are easier to collect than income taxes. This is a particularly attractive option in many LEDCs where revenue collection is difficult due to the size of the informal economy. Secondly, collecting tax revenue from sales taxes is not a disincentive to work hard. which is the case for income tax rates, where individuals pay a greater level of tax the more that they earn.</span></p></section></div><div class="pinkBg"><h4><strong>Activity 8: Laffer curve </strong></h4><p>Many governments throughout the world have gone on record as saying that the reduction of income inequality is an economic priority. Others have gone further and stated that they are prepared to levy very high punitive tax rates on the wealthiest households within the society, as part of this policy objective. A socialist government in 1970s UK even famously stated that he wanted to 'squeeze the wealthy until the pips squeak'.</p><p>Despite such claims many governments have refrained from imposing such measures and if anything progressive tax rates have fallen throughout the world, noticeably so for the highest income earners. Why is this, watch the following short video and then explain why don't all socialist / left leaning governments impose high rates of taxation on their wealthiest citizens? </p><p style="text-align: center;"><iframe allowfullscreen="" frameborder="0" height="360" src="//www.youtube.com/embed/BomQxCG5VG4" width="640"></iframe> </p><section class="tib-hiddenbox"><p><strong><img alt="" src="/media/ib/economics/images/macro-economics/laffer-curve-new-one.jpg" style="width: 300px; height: 300px; float: right;" /></strong><span style="color:#FF0000;">One of the reasons for this is that extracting tax revenue from the wealthiest members of a society is actually more difficult that it sounds with legal tax avoidance methods common place and a whole army of 'tax experts' set up to ensure that the richest individuals and corporations can successfully reduce their tax burden by employing legal measures - for a fee. The balance to strike for any government therefore is to set tax rates high enough so that the treasury collects sufficient revenue to finance its public spending commitments but not have tax rates so high that tax payers prefer to employ a tax expert to avoid paying it.</span></p><p><em><span style="color:#FF0000;">This can be illustrated by the Laffer curve</span></em><span style="color:#FF0000;">, designed by Arthur Laffer, illustrates the relationship between the income tax rate and the level of tax revenue collected. At 0% tax, the level of tax collected is 0. As the government raises the income tax rate then the level of taxation revenue rises until an optimum point, around 45%. After which if the government tries to raise tax rates further individuals will simply stop paying tax, even by illegal means. The optimum rate of income tax, therefore, would appear to be around 45%. At an income tax rate of 100% the level of tax revenue would also be zero.</span></p></section><p>Further reading on the relationship between income tax and the amount of tax revenue collected:</p><p><a href="/media/ib/economics/files/macro-economics/laffer-curve-article.pdf" target="_blank" title="Key study"><img class="ico" src="https://assets.inthinking.net/thinkib/icons/key-study.png" /> Article 1</a></p></div><div class="pinkBg"><h4><strong>TOK exercise</strong></h4><p>One of the common issues in any election concerns the issue of taxation and spending. Specifically how tax revenues are collected and more importantly how much is collected and secondly where it is allocated. Government spending on the military as well as welfare and public services are hotly debated election topics. </p><p>Take a look at the following short video and then answer the question, should citizens get the right to decide how their tax revenue is spent? This is best completed as a group exercise where the two groups take opposite view points.</p><p style="text-align: center;"><iframe allowfullscreen="" frameborder="0" height="360" src="//www.youtube.com/embed/jIhfYuukWY0" width="640"></iframe></p></div><div class="pinkBg"><h4><strong>Activity 9: Revision questions</strong></h4><p>(a) Do high income households benefit from transfer payments as well as households on low incomes?</p><section class="tib-hiddenbox"><p><span style="color:#FF0000;">Quite likely, a wealthy family for instance may be more likely to stay in education longer and also live longer – thus receiving a state pension for a longer period of time. On the other hand the wealthiest individuals pay significant sums in tax but use less public services. They may for instance pay for their children to attend private school, enjoy private medical treatment and not use public transport. Alternatively they may not?</span></p></section><p>(b) Explain the possible impact on income distribution when a government changes from a progressive direct tax system to a regressive indirect taxes?</p><section class="tib-hiddenbox"><p><span style="color:#FF0000;">Such a move by any government is likely to make for a less equal distribution of income in the nation. This is because direct taxes are examples of a progressive taxation system, the burden of which falls primarily on wealthy households - at least in absolute terms. </span></p><p><span style="color:#FF0000;">By contrast indirect taxes are examples of a regressive taxation system, the burden of which falls primarily on low income households - at least in proportional terms. Moving from one tax system to the other, therefore, will increase the tax burden of low income households and reduce the burden on wealthier households.</span></p><p><span style="color:#FF0000;"><strong>So why would a government consider such a policy change?</strong></span></p><p><span style="color:#FF0000;">For the simple reason that regressive taxation systems, while increasing inequality levels within a society, have the advantage of providing an incentive for individuals to work harder and innovate by allowing those who benefit from their endeavour to keep a larger proportion of their income.</span></p></section></div><div class="pinkBg"><h4>Activity 10: The universal basic income</h4><p>Watch the following short video on Finland, a nation one of the first to trial a universal basic income. One year later has it worked?</p><p style="text-align: center;"><iframe allowfullscreen="" frameborder="0" height="360" src="//www.youtube.com/embed/mkF-Lsy-SlM" width="640"></iframe></p><section class="tib-hiddenbox"><p><span style="color:#FF0000;">One advantage of the system is that it allowed him the flexibility to retrain and / or start a business. Under the old welfare system that would be impossible because the recipient would lose their welfare benefits by doing so. Another advantage is that the system is less bureaucratic than the traditional welfare systems, which are means tested.</span></p><p><span style="color:#FF0000;">Disadvantages of the system include the fear that it may create yet more low paid, low skilled jobs. The system would also be very costly and is it really right that this payment would be provided to all - even the richest members of a society?</span></p></section></div><div class="blueBg"><h4><strong>Activity 11: Link to the assessment</strong></h4><p><em>An example of a relevant paper one question:</em></p><p>(a) Explain why free market economic systems have a less equal distribution of income. <em>[10 marks] </em></p><section class="tib-hiddenbox"><p><span style="color:#FF0000;"><em>Responses should include the following:</em></span></p><p><span style="color:#FF0000;"><img alt="" src="/media/ib/economics/images/macro-economics/usa-and-germany-lorenz.jpg" style="width: 300px; height: 300px; float: left;" />A definition of a free market system and income distribution. </span></p><p><span style="color:#FF0000;">An explanation of why free market economic systems may be less equal in terms of income distribution.</span></p><p><span style="color:#FF0000;">A recognition that in free markets that all factors of production are controlled and owned by private individuals, the low progressive tax rates (the burden of which falls primarily on high earners) present in free market economic systems as well as an absence of transfer and other welfare payments. The recipients of transfer and other welfare payments are more likely to be low income households.</span></p><p><span style="color:#FF0000;">A suitable diagram such as a Lorenz curve, showing a less equal distribution of income in market economic systems, such as the USA, compared to a more mixed economic system such as Germany. For example on the diagram the poorest 20% of the population in USA own collectively less than the lowest 20% of earners in Germany.</span></p><p><span style="color:#FF0000;">A recognition that income inequality is measured by the gini co-efficient. We would expect to see a higher gini co-efficient within free market economic systems.</span></p><p><span style="color:#FF0000;">Responses should conclude with a comparison of economies with a high gini co-efficient<em> such as USA</em> and a low co-efficient, <em>e.g. </em>Germany.</span></p></section><hr class="hidden" /><p>(b) Using real life examples, evaluate different government policies, which promote greater income equality, in terms of their effects on efficiency in the allocation of resources. <em>[15 marks] </em></p><section class="tib-hiddenbox"><p><span style="color:#FF0000;"></span><em><strong>Command term: </strong></em><em>Evaluate</em></p><p><span style="color:#FF0000;">In this example the command term evaluate requires candidates to make a judgement on the validity of the above statement. Responses should also include an overall conclusion, based on the evidence submitted.</span></p><p>A relevant real world example might include a comparison of the efficiency of largely free market economies, such as Hong Kong or USA with nations that implement extensive government policies aimed at reducing income inequality e.g. many EU nations.</p><p><span style="color:#FF0000;"><strong><em>Responses should include the following in their response:</em></strong></span></p><p><span style="color:#FF0000;"><img alt="" src="/media/ib/economics/images/macro-economics/laffer-curve-new-one.jpg" style="width: 320px; height: 320px; float: right;" />A definition of income equality and economic efficiency.</span></p><p><span style="color:#FF0000;">A discussion of different policies which may be employed to reduce income inequality levels. Examples include a greater use of progressive taxes and transfer payments. Governments can reduce income inequality by increasing progressive taxes, the burden of which falls primarily on high income households, as well as increasing government spending on transfer payments. Dealing with high taxes first, particularly progressive taxes such as income or corporation tax, economic theory dictates that raising the rate of income tax will be effective in reducing income inequality, but it may not be effective in improving economic welfare. The Laffer curve on the right illustrates the relationship between the % rate of income tax and the level of tax revenue collected. As governments have discovered to their cost in the past, once the level of tax rises past its optimum point, tax revenue will fall as individuals will simply work less, reducing the effectiveness of any income inequality reduction policy.</span></p><p><span style="color:#FF0000;">Similarly, while increasing the level of transfer payments e.g. public sector wages, pensions, sickness payments and out of work benefits, is likely to improve income equality, with the recipients of such payments more likely to be from low income households, the policy may also provide a disincentive to work. This is because some recipients may simply <img alt="" src="/media/ib/economics/images/macro-economics/usa-and-germany-lorenz.jpg" style="width: 300px; height: 300px; float: left;" />choose to collect benefits, rather than looking for employment.</span></p><p><span style="color:#FF0000;">In other words policies which are effective in reducing income equality may also reduce economic efficiency by providing a disincentive to work or set up a business as the burden of progressive taxes will always fall heaviest on those who benefit from working hard to increase their disposable income.</span></p><p><span style="color:#FF0000;">This is illustrated by the next two diagrams diagrams. The first on the left, illustrates the Lorenz curve for two different nations. The red line represents Germany, which implements a range of policies aimed at poverty and income inequality reduction, including a rise in progressive taxes and transfer payments. The green line represents the USA which does not – leaving this up to the free market. Unsurprisingly Germany experiences lower levels of inequality, represented by a smaller Gini coefficient, but as a consequence may experience from a loss of efficiency.</span></p><p><span style="color:#FF0000;"><img alt="" src="/media/ib/economics/images/macro-economics/ppf-equality.jpg" style="width: 300px; height: 300px; float: right;" />The second diagram, to the right, illustrates this, illustrating a production possibility frontier, with point A drawn on the edge of the PPF curve and representing an economy running efficiently and point B lying within the boundary of the PPF. The loss of economic efficiency, resulting from a rise in progressive taxes and transfer payments, is represented by a move from point A to point B on the diagram.</span></p><p><span style="color:#FF0000;"> <span style="color:#FF0000;">The mark bands for using a real world example can be accessed by providing examples of where such policies have been used. This might include, for instance, a comparison of two countries such as Sweden and USA. Alternatively responses might include an example of where a government has implemented poverty reduction policies and seen a fall in inequality as a result.</span> </span></p><p><span style="color:#FF0000;">The essay should finish with an evaluation on the impact of income equality policies on a range of different stakeholders. Relevant stakeholders might include entrepreneurs, low paid workers, high paid workers as well as the recipients of social benefit payments.</span></p></section><span style="color:#FF0000;"> </span></div><script>document.querySelectorAll('.tib-teacher-only').forEach(e => e.remove());</script>
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