Econ Test 3

Shania and Nick own a convenience store together. They share equal responsibility and liability for their business, and each person receives 50 percent of the profits. What kind of business organization is it?

• Sole Proprietorship
• Partnership
• Cooperative
• Nonprofit

Which of the following is the primary measure of a nation’s income and output?

• Net National Product
• Gross Domestic Product
• The Macroeconomy
• National Income

Which of the following statements best describes what happened to the GDP in 2008?

• The GDP fell because of a major recession
• The GDP rose because of contractionary fiscal policy
• The GDP rose because businesses paid higher taxes
• The GDP held steady due to seasonal adjustments

Why do you think the Federal Reserve Bank sometimes lowers interest rates on loans to commercial banks?

• To encourage consumers to spend less money
• To encourage borrowing to stimulate economic activity
• To make the economy slow down
• To discourage banks from loaning out money

The growth of the internet has caused newspaper circulation to fall. What type of unemployment might this printing press operator face in the future?

• Frictional unemployment
• Seasonal Unemployment
• Cyclical Unemployment
• Structural Unemployment

Which explains the reason unemployment doesn’t decrease when economic growth is two and a half percent?

• Population growth adds new people to the workforce at about that rate
• Economic growth and unemployment are unrelated
• Economic growth leads to further unemployment because companies buy more computers
• At that rate of growth, people spend more time looking for their ideal job

Which type of tax is levied at the same percentage for people at all income levels?

• Regressive
• Inelastic
• Progressive
• Proportional

Which of the following statements is supported by this graph?

• The higher the income, the lower the share of income paid in sales and excise taxes
• The lower the income, the greater the amount of money paid in sales and excise taxes
• The higher the income, the lower the rate at which sales and excise taxes are charged
• The lower the income, the higher the rate at which sales and excise taxes are charged

Look at this circle graph, and consider who pays the taxes that make up each section of it. Which statement best summarizes the information shown here?

• Social Security is the single most important source of revenue for the federal government
• The share of federal revenue contributed by corporations and taxpayers is roughly equal
• Corporations are responsible for the large majority of federal government revenue
• Individual taxpayers are responsible for the large majority of federal government revenue

Federal income tax is collected on a “pay-as-you-earn” system. This means that individuals usually pay most of their income tax throughout the calendar year as they earn income. What is another name for this system.

• Withholding
• Mandatory spending
• Incentive taxation
• Progressive taxation