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- 1. Multiple Choice
What is the main purpose of a sin tax?
revenue generation
income redistribution
behavior adjustment
resource allocation
- 2. Multiple Choice
Which of the following is most like a national sales tax?
a value-added tax (VAT)
a sin tax
income tax
an excise tax
- 3. Multiple Choice
Which statement is most accurate?
The debt ceiling is a requirement that new spending proposals or tax cuts must be offset by reductions elsewhere.
The debt ceiling authorizes spending on new entitlement programs.
The debt ceiling permits borrowing for expenditures that have already been authorized by Congress and the president.
The debt ceiling is the total amount borrowed from investors to finance the government's deficit spending.
- 4. Multiple Choice
The tax code is indexed to compensate for _______.
inflation
different levels of income
budget deficits
all of the above
- 5. Multiple Choice
Which of the following is the single largest source of federal revenue?
Medicare payroll taxes
individual income tax
corporate income tax
borrowing
- 6. Multiple Choice
Which of the following is the single largest federal expenditure?
national defense
Social Security
interest
Medicare
- 7. Multiple Choice
An effective tax is one that exhibits one or more of the following characteristics.
equity
simplicity
efficiency
all of the above
- 8. Multiple Choice
"Those who benefit from government goods and services should pay in proportion to the amount of benefits they receive." So states the ______.
alternative minimum tax
incidence of tax
benefit principle
ability-to-pay rule
- 9. Multiple Choice
The terms proportional, progressive, and regressive refer to ______.
goals of tax reform
criteria for effective taxes
principles of taxation
types of taxes
- 10. Multiple Choice
In discussing taxes, which is the opposite of regressive?
value-added
progressive
flat
alternative
- 11. Multiple Choice
Which type of tax is levied on the sale of an asset held for 12 months or longer?
sales tax
marginal tax
flat tax
capital gains tax
- 12. Multiple Choice
Which type of tax is levied on specific items or services, including gasoline and telephone services?
customs duty
estate tax
excise tax
gift tax
- 13. Multiple Choice
Which of the following could be considered a synonym for FICA?
intergovernmental revenues
excise tax
payroll tax
corporate income tax
- 14. Multiple Choice
Which of the following is NOT an example of federal mandatory spending?
Social Security
Medicare
income security
national defense
- 15. Multiple Choice
Higher-than-normal interest rates caused by heavy government borrowing hurts private borrowers through _________.
deficit spending
spending caps
the crowding-out effect
the "pay-as-you-go" provision
- 16. Multiple Choice
The final burden of a tax is known as _________.
a direct tax
the average tax rate
a value-added tax
the incidence of a tax
- 17. Multiple Choice
Tax loopholes violate which criterion for effective taxes?
efficiency
simplicity
equity
collectability
- 18. Multiple Choice
A 4 percent sales tax on clothing is an example of a regressive tax, because as a person's income increases, the percentage of income paid in taxes _________.
decreases
stays the same
increases
fluctuates
- 19. Multiple Choice
In the early 1990s, ten years of tax cuts meant government spending was growing faster than revenue. In 1993 Congress added two top marginal tax brackets to _________.
simplify the tax code
increase revenue
slow production
decrease spending
- 20. Multiple Choice
What is the term for legislation authorizing spending for certain purposes?
continuing budget resolution
appropriations bill
earmark
mandatory spending
- 21. Multiple Choice
The federal government's largest category of spending is Social Security. What is the second largest?
transportation
education
national defense
health
- 22. Multiple Choice
What is an entitlement?
the requirement that new spending proposals or tax cuts must be offset by reductions elsewhere in the budget
a program or benefit using established eligibility requirements to provide health, nutritional, or income supplements to individuals
the power to cancel specific budget items without rejecting the entire budget
a law that requires automatic and arbitrary budget cuts
- 23. Multiple Choice
Which example shows a budget surplus?
$4 trillion in revenue and $3.89 trillion in expenditures
$3.5 trillion in revenue and $4.75 trillion in expenditures
$4 trillion in revenue and $4.14 trillion in expenditures
$3.5 billion in revenue and $3.58 trillion in expenditures
- 24. Multiple Choice
Which of the following best identifies the incidence of the individual income tax?
wages
corporation
workers
frequency
- 25. Multiple Choice
per person basis; total divided by population
median
per capita
individual quotient
persona non grata
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