Question：taxes are collected by the Revenue authority from an intermediary, which attempts to pass on the tax to consumers in the price of goods.

　　Which word correctly completes this statement?

　　A. Progressive

　　B. Direct

　　C. Indirect

　　D. Income

　　The correct answer is: Indirect

　　Rationale: The definition clearly distinguishes an indirect tax (eg sales tax) from a direct tax, which is paid direct by a person to the Revenue authority (eg income tax, corporation tax, capital gains tax and inheritance tax). Progressive refer to the proportion of income taken by a tax.

　　Question：In a free market economy, the price mechanism:

　　A. Allocates resources

　　B. Aids government control

　　C. Reduces unfair competition

　　D. Measures national wealth

　　The correct answer is: Allocates resources

　　In a free market economy, it is the interaction of supply and demand through the price mechanism that determines what should be produced and who should get it.