Question

[16] Over the last 25 years the dollar amount of government expenditures has been:
A) increasing.
B) decreasing.
C) relatively constant.
D) fluctuating widely up and down.

[17] Which of the following is a public good?
A) A lighthouse.
B) A private hospital.
C) A commercial airliner.
D) A corporation's charitable redevelopment of a city neighborhood.

[18] A good or service that is provided for all of society, and no one is excluded from its use, is called:
A) a necessity.
B) a public good.
C) a private good.
D) an entitlement.


[19] Which of the following is NOT an example of a public good?
A) Toll roads.
B) Street lights.
C) National defense.
D) Information from the National Weather Service.

[20] Which of the following is a government transfer payment?
A) A tax refund.
B) Unemployment compensation.
C) An expenditure for the construction of a public park.
D) All of these answers are correct.

[21] On which function does the federal government spend the most money?
A) Net interest.
B) Social Security and Medicare.
C) Education.
D) Energy, transportation, and environment.

[22] The main source of revenue for the federal government is:
A) corporate income taxes.
B) individual income taxes.
C) contributions for social insurance.
D) excise, customs, estate, and gift taxes.

[23] For which of the following taxes is there a direct relationship between the tax rate and the amount of income earned?
A) Regressive tax.
B) Progressive tax.
C) Proportional tax.
D) Consumption tax.

[24] An appropriate fiscal policy response to demand-pull inflation would be to:
A) increase government expenditures and taxes.
B) decrease government expenditures and taxes.
C) increase government expenditures and decrease taxes.
D) decrease government expenditures and increase taxes.

[25] A regressive tax results in lower income individuals paying:
A) more taxes than higher income individuals.
B) the same percentage of their income in a tax as higher income individuals.
C) a higher percentage of their income in a tax than higher income individuals.
D) none of these answers are correct.

[26] Fiscal policy is carried out primarily by:
A) local governments.
B) state governments.
C) the federal government.
D) state and local governments.

[27] Which of the following is a regressive tax?
A) The federal individual income tax.
B) A state tax of 5 percent of earned income.
C) A local tax of $75.00 per person per year for fire protection.
D) None of these answers are correct.

[28] The term "tax base" refers to the:
A) legislation justifying a particular tax.
B) lowest rate that must be paid on a particular tax.
C) physical location out of which government tax officials work.
D) particular thing on which a tax is levied, such as earned income or a product that is sold.

[29] A major tax concern for many large cities in the U.S. is:
A) a decline in their tax bases.
B) the departure of businesses to other locations.
C) their abilities to raise revenues through taxes imposed on smaller, generally poorer, populations.
D) all of these answers are correct.

[30] Fiscal policy tools include changes in each of the following EXCEPT:
A) taxes.
B) interest rates.
C) transfer payments.
D) government expenditures.

Answer 1

16.

A

Government expenditure has been increasing consistently over the last 25 years.

17.

A

Lighthouse is a public good as it is non-excludable as well as non-rivalrous in nature.

18.

B

It is a case of public good.

19.

A

Toll roads are used by paying toll taxes, so it is not a public good.

20.

B

Such type of transfer payments are also called as automatic stabilizers.

21.

B

22.

B

Maximum collection comes from individual income tax collections.

23.

B

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