Total Marks 5
Starting Date Monday, January 20, 2020
Closing Date Tuesday, January 28, 2020
Question Title Fiscal policy
South Korea is 4th largest economy in Asia. This economy has a strong export base and skilled labor force. Important sectors of this economy are automobiles, shipbuilding, mining and tourism. South Korea achieved a landmark in tourism in November, 2012 by attracting 10.3 million visitors. It was the first time that the number of foreign tourists topped 10 million in a year. Suppose, in order to meet the expenditures faced by tourism department of South Korea Ministry of Culture, Sports and Tourism, government decides to increase the direct and indirect tax rate.
Keeping in view the above facts and figures, Explain logically that how would this strategy (Increase in taxation) affect the incomes and consumption of the people of South Korea?
Note: Be specific in your answer. Write to the point in your own words. Avoid irrelevant details.