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Explain the following terms: (i) Direct tax; (ii) Government Capital Spending; (iii) National debt. - Leaving Cert Economics - Question 5 - 2017
Question 5
Explain the following terms: (i) Direct tax; (ii) Government Capital Spending; (iii) National debt.
Worked Solution & Example Answer:Explain the following terms: (i) Direct tax; (ii) Government Capital Spending; (iii) National debt. - Leaving Cert Economics - Question 5 - 2017
Step 1
Direct tax;
Answer
A direct tax is a type of tax imposed directly on individuals or organizations' income or wealth. This can include taxes on salaries, property, and profits. The key characteristic of a direct tax is that it is paid directly to the government by the taxpayer and cannot be passed on to someone else.
Step 2
Government Capital Spending;
Answer
Government Capital Spending refers to the funds used by the government for long-term investments that enhance infrastructure and provide benefits over time. This spending is aimed at improving public assets such as roads, schools, hospitals, and utilities, contributing to the overall economic development of the country.
Step 3
National debt.
Answer
National debt is the total amount of money that a government owes to creditors as a result of borrowing to cover budget deficits. This debt accumulates over time when a government spends more than it collects in revenues, and it may be financed through various means such as issuing bonds. National debt needs to be managed carefully to ensure economic stability.