Income (household)Define: Money received on a regular basics from work or investments.Example: $500 p/w from making cloths

TaxationDefine: The levying of tax, which is a compulsory contribution to the government, which is a calculated sum of money, based on worker's income.Example: 10% of income goes to government

Government spendingDefine: Government expenditure on goods and services. Example: Collective goods and services (goods and services free to the general public)

Increase income = Increase tax (more tax is charged if individuals have higher income)

Incr

ease

taxa

tion

= La

rger

gov

ernm

ent b

udge

t as t

he

gove

rnm

ent's

prim

ary s

ourc

e of

mon

ey is

tax

Increase government spending = Increase collective goods and

services for individuals, as the government invests in the public.

Decrease income = Increase tax (less tax is charged if individuals have lower income)

Decr

ease

taxa

tion

= Sm

aller

gov

ernm

ent b

udge

t as t

he

gove

rnm

ent's

prim

ary s

ourc

e of

mon

ey is

tax

Decrease government spending = Decrease collective goods

and services for individuals, as the government has less m

oney

to invests in the public.