1. One of the economic aims of the government is 'Balanced Regional Development'.

(i) Explain the meaning of the underlined term.

(ii) Outline two policies which the government could implement to promote regional

development.

(iii) 'Balanced Regional Policy has an opportunity cost'. Explain this statement, using an

example to support your answer.

2 .(i) Explain, with the aid of an example, how it is possible for banks to create credit.

(ii) Outline how a desire by banks to reduce their level of bad debts might affect their

ability to create credit.

(iii) Explain two other factors which could affect their ability to create credit.

3.In each of the following distinguish between the terms:

(i) 'progressive taxation' and 'regressive taxation';

(ii) 'tax avoidance' and 'tax evasion'.

(b) (i) Outline the main functions of taxation.

(ii) Explain, using an example, the meaning of the term 'incidence of tax'.

(iii) Outline two reasons why the Minister for Finance regularly taxes goods such as alcohol,

cigarettes and petrol in the Government's annual budget.