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| 1 | |
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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| 2 | |
Production of good X creates substantial external costs in addition to private costs. Economic theory suggests X should be: |
| | A) | prohibited |
| | B) | discouraged by taxing either its manufacture or its consumption |
| | C) | encouraged by subsidizing either its manufacture or its consumption |
| | D) | neither encouraged nor discouraged in a free market society |
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| 3 | |
If a free market allocates too many resources to the production of some good, then: |
| | A) | production of this good likely creates external costs |
| | B) | production of this good likely creates external benefits |
| | C) | this good is likely characterized by nonrivalry and nonexcludability |
| | D) | production of this good likely should be subsidized |
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| 4 | |
"Tax Freedom Day" is: |
| | A) | the anniversary of the day the constitutional amendment allowing for a U.S. income tax was ratified |
| | B) | April 15th of each year |
| | C) | the day by which Congress must pass any new budget resolutions |
| | D) | the day by which the typical worker has earned enough money to pay his or her share of taxes |
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| 5 | |
Which type of business organization provides limited liability to its owners? |
| | A) | Sole proprietorship |
| | B) | Partnership |
| | C) | Corporation |
| | D) | Principal company |
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| 6 | |
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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| 7 | |
Legal business forms, listed in order from fewest to greatest in number, are comprised of: |
| | A) | partnership, sole proprietor, corporation |
| | B) | monopolist, oligopolist, competitor |
| | C) | corporation, partnership, sole proprietor |
| | D) | partnership, corporation, sole proprietor |
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| 8 | |
Government purchases and transfer payments: |
| | A) | both contribute to total domestic output |
| | B) | differ in that only government purchases contribute to total domestic output |
| | C) | differ in that only transfer payments contribute to total domestic output |
| | D) | do not contribute to total domestic output |
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| 9 | |
At the state level: |
| | 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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| 10 | |
A common stock: |
| | A) | is another name for a corporate bond |
| | B) | represents a share in the ownership of a corporation |
| | C) | does not give its owner the right to vote in a corporation, as these rights are reserved for preferred stock |
| | D) | cannot be transferred to another individual |
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