Econ Chapter 14 Test

Hey there! Priya, Kai, and Aiden are discussing taxes over coffee. They're curious about what the taxes collected under the Federal Insurance Contribution Act (FICA) fund. Can you help them out?

• a. Social Security and Medicaid

• b. Social Security and Medicare

Answer explanation

Taxes collected under FICA fund Social Security and Medicare, making option b the correct choice.

Imagine Ethan is exploring social programs for a school project. He comes across a term and asks, 'Which of the following defines a means-tested program?' Help Ethan out!

• a. Eligibility depends on income.

• b. People pay first and receive benefits later.

Answer explanation

Means-tested programs determine eligibility based on income, making choice a. the correct definition.

Imagine Hannah is shopping for her favorite snacks. Who generally bears most of a sales tax when the demand for the snacks is inelastic?

• b. the consumer

• a. the retailer

Answer explanation

When the demand for a good is inelastic, consumers are less responsive to price changes, leading them to bear most of the sales tax burden.

Hey there! Anika, Zoe, and Grace are curious: What exactly do Social Security taxes help fund?

• transportation and training expenses for low-income people

• benefits to older citizens, surviving family members of wage earners, and people with certain disabilities

Answer explanation

Social Security taxes pay for benefits to older citizens, surviving family members of wage earners, and people with certain disabilities.

Which of the following is one reason the federal government collects income taxes as a person earns?

• a. so that people do not realize exactly how much they are paying
• b. so that the money can be put aside until it is needed
• C. so that the government can pay bills as they come due
• d. so that taxpayers can qualify for refunds of excess tax

Imagine Hannah and Mason are discussing budgets in their economics class. Hannah asks, 'What is a major difference between an operating budget and a capital budget?' How would you help them understand?

• a. Operating budgets require legislation; capital budgets do not.

• d. Operating budgets cover daily expenses; capital budgets cover investments.

Answer explanation

Operating budgets cover daily expenses, while capital budgets cover investments, making option d the correct choice.

Hey there! Kai, Evelyn, and Abigail are discussing government programs. Can you help them understand what an entitlement is?

• a. a social welfare program providing benefits to people who meet certain eligibility requirements

• b. a social welfare program paying bills for government spending such as supplies and utilities

Answer explanation

An entitlement is a social welfare program providing benefits to people who meet certain eligibility requirements, making option a the correct choice.

Hey there! Michael, Hannah, and Liam are discussing local government finances in their civics class. They're curious: What is the major source of tax revenue for local governments?

• C. property taxes

• b. income taxes

Answer explanation

Property taxes are the major source of tax revenue for local governments, making option C the correct choice.

Imagine Anika, Ethan, and Liam are playing a game of Monopoly. Anika lands on Ethan's property with a hotel. What is the required payment Anika must make to Ethan, which is also a common obligation to local, state, or national governments?

• Tax

• Revenue

Answer explanation

A required payment to a local, state or national government is known as a tax, making it the correct choice among the options provided.

Ethan, Grace, and Nora are planning a school event. They need to figure out the budget for day-to-day expenses. What type of budget are they looking at?

• Operating budget

• Cash budget

Answer explanation

Operating budget is used to allocate funds for day-to-day expenses of an organization, making it the correct choice for this scenario.