 |
| 1 | |
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 |
|
|
|
| 2 | |
Among all types of business forms, sole proprietorships account for approximately: |
| | A) | 75% of businesses but account for only 5% of total sales |
| | B) | 55% of businesses but account for only 20% of total sales |
| | C) | 20% of businesses but account for 55% of total sales |
| | D) | 5% of businesses but account for 20% of total sales |
|
|
|
| 3 | |
Jeri owns $300,000 of stock in ABC Corporation and has a personal net worth of $2,000,000. The company goes bankrupt with debts totaling over $50,000,000. The most Jeri can lose as a result is: |
| | A) | Zero |
| | B) | $300,000 |
| | C) | $2,000,000 |
| | D) | $2,300,000 |
|
|
|
| 4 | |
Free markets will tend to underallocate resources to the production of goods that: |
| | A) | are public goods |
| | B) | are characterized by rivalry and excludability |
| | C) | generate external costs |
| | D) | are subject to the principal-agent problem |
|
|
|
| 5 | |
The most important source of local tax revenue is: |
| | A) | sales and excise taxes |
| | B) | personal and corporate income taxes |
| | C) | estate and inheritance taxes |
| | D) | property taxes |
|
|
|
| 6 | |
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% |
|
|
|
| 7 | |
For the U.S. income tax, the average tax rate increases as income increases. We can therefore conclude the tax is: |
| | A) | equitable |
| | B) | regressive |
| | C) | proportional |
| | D) | progressive |
|
|
|
| 8 | |
When asked what a particular government program is worth to them, individuals have an incentive to underreport the true value. This is known as the: |
| | A) | nonrivalry problem |
| | B) | spillover principle |
| | C) | free-rider problem |
| | D) | principal-agent problem |
|
|
|
| 9 | |
Bees from a keeper's hive can pollinate fruit trees for many surrounding orchards. Therefore, the production of honey: |
| | A) | generates external benefits and should be encouraged through subsidies |
| | B) | generates external benefits, however resources are correctly allocated in this market |
| | C) | generates external costs and should be discouraged through taxes |
| | D) | needs no government interaction. Beekeepers reap all private benefits |
|
|
|
| 10 | |
In the circular flow diagram expanded to include government: |
| | A) | only households receive government-produced goods and services while paying net taxes |
| | B) | only businesses receive government-produced goods and services while paying net taxes |
| | C) | both households and business receive government-produced goods and services while paying net taxes |
| | D) | only households pay net taxes while only businesses receive government-produced goods and services |
|
|
.