The UK government feels there is a decline in total consumptionreducing AD. For this reason, it decides to buy physical assets ownedby banks. This is an example of a Fiscal policy.2. Government spending on final goods and services is an injection intothe economy.3. Air passenger duty is an example of a direct tax.4. A Proportional tax system involves the average rate of taxationdeclining as income rises.5. The Slovakian govt has a total of $5Billion which it sources from taxesand other revenue sources in 2019. Total government expenditure (𝐺)is $5.5Billion for the same year. This is an example of deficitfinancing.Section B: Discussion QuestionsI. Show the effect of higher interest rates on AD.II. Are supply-side policies superior to demand-side policies? Givereasons for your answer.

The UK government feels there is a decline in total consumptionreducing AD. For this reason, it decides to buy physical assets ownedby banks. This is an example of a Fiscal policy.2. Government spending on final goods and services is an injection intothe economy.3. Air passenger duty is an example of a direct tax.4. A Proportional tax system involves the average rate of taxationdeclining as income rises.5. The Slovakian govt has a total of $5Billion which it sources from taxesand other revenue sources in 2019. Total government expenditure (𝐺)is$5.5Billion for the same year. This is an example of deficitfinancing.Section B: Discussion QuestionsI. Show the effect of higher interest rates on AD.II. Are supply-side policies superior to demand-side policies? Givereasons for your answer.