Financial Planning II 5.01

An individual with a higher income who pays a larger percentage of income tax than an individual with a lower income is in a:

• flat tax system

• regressive tax system

• progressive tax system

• proportional tax system

Paying taxes to the federal government allows it to provide goods and services to:

• businesses and households

• businesses and product markets

• households and product markets

• businesses and resource markets

The government decides to pass a new law requiring certain standards of air cleanliness be met. They will levy a tax on production of automobiles that produce gas emissions above a certain limit. However, they provide tax incentives to automobile manufacturers for research and development of new cars with lower gas emissions. This is an example of:

• rent seeking

• hidden costs

• direct controls

• transfer payments

What type of tax are businesses required to pay on the profits they earn?

• excise

• income

• property

• sales

The authorized Federal Insurance Contributions Act tax is taken from each employee's paycheck. It appears on the pay stub as FICA and is applied to an individual's:

• property tax

• Medicare benefit

• Social Security benefit

• workers' compensation benefit

In the circular flow model, what does the government provide to both businesses and households?

• goods and services

• employment and wages

• tax incentives and tax breaks

• protection and a market economy

One function of a regulatory tax on business is to:

• limit business profit

• control business behavior

• decrease employee liability

• control employee compensation