Economics Chapter 13 & 14 Test Review

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

• a. benefit principle.
• b. ability-to-pay rule.
• c. incidence of tax.
• d. alternative minimum tax.

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

• a. an excise tax
• b. a sin tax
• c. a value-added tax (VAT)
• d. none of the above

. Higher-than-normal interest rates caused by heavy government borrowing hurts private borrowers through

• a. deficit spending.
• b. spending caps.
• c. the crowding-out effect.
• d. the "pay-as-you-go" provision.

. Which of the following can cost you money in large interest payments?

• a. a debit card
• b. a credit card
• c. a checking account
• d. a savings account

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

• a. the federal government.
• b. state governments.
• c. local government.
• d. natural monopolies.

The terms proportional, progressive, and regressive refer to

• a. criteria for effective taxes.
• b. types of taxes.
• c. principles of taxation.
• d. goals of tax reform

Which of the following is true about inflation?

• a. Inflation has a tendency to make people change retail spending habits.
• b. Economists have agreed on a single explanation for the cause of inflation.
• c. Inflation tempts some people to speculate in an attempt to take advantage of rising prices.
• d. Inflation is a decrease in the general level of the prices of goods and services.

What do state governments spend the most on?

• a. local governments
• b. the federal government
• c. welfare
• d. higher education

The tax code is indexed to compensate for

• a. inflation.
• b. different levels of income.
• c. budget deficits.
• d. all of the above.

Which group has the highest unemployment rate in the U.S.?

• a. African Americans
• b. Caucasians
• c. Asians
• d. women