Econ Chapter 14: Taxes & Government Spending

What is the main purpose of a sin tax?

• revenue generation

• income redistribution

• behavior adjustment

• resource allocation

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

• a value-added tax (VAT)

• a sin tax

• income tax

• an excise tax

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.

The tax code is indexed to compensate for _______.

• inflation

• different levels of income

• budget deficits

• all of the above

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

• Medicare payroll taxes

• individual income tax

• corporate income tax

• borrowing

Which of the following is the single largest federal expenditure?

• national defense

• Social Security

• interest

• Medicare

An effective tax is one that exhibits one or more of the following characteristics.

• equity

• simplicity

• efficiency

• all of the above

"Those who benefit from government goods and services should pay in proportion to the amount of benefits they receive." So states the ______.

• alternative minimum tax

• incidence of tax

• benefit principle

• ability-to-pay rule

The terms proportional, progressive, and regressive refer to ______.

• goals of tax reform

• criteria for effective taxes

• principles of taxation

• types of taxes

In discussing taxes, which is the opposite of regressive?

• value-added

• progressive

• flat

• alternative