Public Accounts & Gov. Budgets

About Q1.The answer is B because of the following reason.
The middle-income group is the original taxpayers before the decrease in salaries tax allowance . A decrease in salaries tax allowance means that more people need to pay the tax and the existing taxpayers, except those paying at the standard tax rate need to pay more taxes. Since the salaries of taxpayers remain constant, those net taxable income of middle-income group will increase under the condition that there is a decrease in the salaries tax allowance. The middle-income group would have to pay a larger proportion of their income as tax.
Regarding Option D, it is incorrect because not all taxpayers would have their after-tax income decrease. For example, those rich people who pay the tax at standard tax rate would have their after-tax income remain constant.About Q.2The answer is A because when there is more universities, the number of F.7 students(it would become F.6 students under the new education system) who promote to universities would increase. In this way, less of them will become the labour force as well as the unemployed population. . Under the condition that increase in labour force(there is still an increase since not all of the F.7 students can continue their study) is more than the increase in unemployment, the unemployment rate will decrease.(Recall:unemployment rate=unemployed population/labour force ). Therefore, there is a probability that the unemployment rate will drop.Regarding option C
The chance of it is much less than a drop in the unemployment rate. A deficit budget occurs when the estimated revenue is smaller than its estimated expenditure. The government's planning of building two universities will not directly lead to a result of a deficit budget. It also depends on estimated revenue (such as taxes) and other estimated expenditure(eg wages of civil servants and the construction of other infrastructure). Since there are too many variables, option C is less appropriate than option A.

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