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| 1 | |
A typical household uses the largest share of its total income for: |
| | A) | personal consumption expenditures |
| | B) | combined income, payroll, sales, and property taxes |
| | C) | personal saving |
| | D) | food |
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| 2 | |
Refer to the following:
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The tax represented in the table above is: |
| | A) | regressive |
| | B) | proportional |
| | C) | progressive |
| | D) | optimal |
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| 3 | |
Considering average state-level spending and revenue: |
| | A) | most spending is for police and fire protection |
| | B) | most spending is for health care and hospital administration |
| | C) | the largest source of revenue is taxes on income |
| | D) | the largest sources of revenue are sales and excise taxes |
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| 4 | |
Refer to the following, in which solid arrows are real flows and broken arrows are monetary flows.
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Flow 3 might represent: |
| | A) | federal government bond purchases |
| | B) | wages paid to chemists at the Environmental Protection Agency |
| | C) | tax refunds from filing federal income taxes |
| | D) | federal disability payments |
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| 5 | |
In a corporation, one primary principal–agent relationship is exemplified by: |
| | A) | owner–stockholder |
| | B) | stockholder–manager |
| | C) | hourly worker–salaried employee |
| | D) | bond holder–stockholder |
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| 6 | |
Good X is characterized by nonrivalry and nonexcludability; good Y is characterized by neither. If both are economically desirable, then: |
| | A) | both can be efficiently provided by private firms |
| | B) | X can be efficiently provided by private firms but Y must be financed through taxes |
| | C) | Y can be efficiently provided by private firms but X must be financed through taxes |
| | D) | both must be financed through taxes |
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| 7 | |
Positive externalities are most likely to be found in the production of: |
| | A) | illegal drugs |
| | B) | DVD recording devices |
| | C) | milk and dairy products |
| | D) | secondary education |
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| 8 | |
Regarding the functional distribution of income in the U.S., which of the following constitutes about 70% of total income? |
| | A) | The top 20% of households |
| | B) | Consumption spending |
| | C) | Business profits |
| | D) | Wages and salaries |
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| 9 | |
If your income increases from $40,000 per year to $41,000 per year and your tax increases from $1000 to $1050, the marginal tax rate is: |
| | A) | $50 |
| | B) | 2.5% |
| | C) | 5% |
| | D) | 10% |
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| 10 | |
Bees from a keeper's hive can pollinate fruit trees for many surrounding orchards. Therefore, the production of honey: |
| | A) | generates a positive externality and should be encouraged through subsidies |
| | B) | generates a positive externality, however resources are correctly allocated in this market |
| | C) | generates a negative externality and should be discouraged through taxes |
| | D) | needs no government interaction. Beekeepers reap all private benefits |
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