Unit 5 Economics Review

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

Which of the following is the single largest federal expenditure? 

• Social Security
• Interest
• Medicare
• National Defense

An economist might argue that a progressive income tax is effective because it is ______. 

• simple
• profitable
• equitable
• beneficial

What is the main purpose of a sin tax? 

• behavior adjustment
• income redistribution
• revenue generation
• resource allocation

Which of the following is most like a national sales tax? 

• excise tax
• sin tax
• value-added tax
• none of the above

The tax code is indexed to compensate for ______. 

• budget deficits
• different levels of income
• inflation
• all of the above

Which of the following is the single largest source of federal revenue? 

• individual income tax
• borrowing 
• corporate income tax
• Medicare payroll taxes

Which of the following best identifies the incidence of the individual income tax?

• workers
• corporation
• wages
• frequency

Elementary schools, police departments, and electrical service are typically paid for by ______. 

• state governments
• local government
• natural monopolies
• federal government

According to Keynes, which sector was most responsible for the instability that led to the Great Depression? 

• consumer
• foreign 
• government
• investment