Advertisements
Advertisements
Questions
Explain how tax can be used as an instrument to regulate consumption and production in an economy.
How are taxes used to regulate consumption and production?
Answer in Brief
Advertisements
Solution
- Taxation policy regulates consumption and production in a country. Taxes are sometimes used to discourage the consumption and production of harmful commodities such as wine, cigarettes, etc.
- They are also effective in diverting the resources from production of non-essential commodities to essential goods.
- It can be done through differential commodity taxation by imposing heavy taxes on production of non-essential goods.
shaalaa.com
Role of State in Economic Development
Is there an error in this question or solution?
Chapter 6: The State and Economic Development - QUESTIONS [Page 184]
RELATED QUESTIONS
Instruments of fiscal policy is:
Identify the tax which is most likely to faster civic conciousness.
Which of the following taxes generate civic consciousness among people?
Define fiscal policy.
State two objectives of fiscal policy.
Define a degressive tax.
What is meant by shifting of tax burden?
An indirect tax can be made progressive by imposing higher tax rates on luxuries. Justify the above statement.
Draw a neat labelled diagram for progressive taxation.
Define a tax.
