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(a) State two sources of Government income or revenue.

(b) All capital is wealth but all wealth is not capital. Explain why all wealth is not capital.

(c) State whether each of the following is a direct or an indirect tax: 

1. Sales tax 

2. Income tax 

3. Wealth tax 

4. Excise duty

(d) State two differences between fixed deposits and savings deposits.

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(a) Two sources of Government income or revenue are: 

1. Taxes: Direct as well as Indirect. 

2. Administrative Revenue: Fees, fines, penalties etc. 

(b) Wealth is anything which has utility, scarcity and is transferable. Capital is a produced means of production. It is first produced by man and then used for the other production of more goods. Since capital goods have all the features of wealth so all capital is wealth. But only that part of wealth is capital which is used in further production of goods. 

For example: Furniture in our house is our wealth but not capital but a car owned by a taxi-driver is his wealth as well as capital. 

(c) 1. Sales Tax: Indirect Tax 

2. Income Tax: Direct Tax 

3. Wealth Tax: Direct Tax 

4. Excise Duty: Indirect Tax 

(d) 1. In a fixed deposit money is deposited in a lump sum for a fixed period of time and cannot be withdrawn before the expiry of the time period. In a savings deposit money can be deposited any number of times and can also be easily withdrawn with the help of cheques. 

2. The rate of interest paid on fixed deposit is the highest whereas a nominal interest is paid on a savings deposit.

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