Unit 3: CFA 2 (Standard 5)

What is taxation?

• The process of saving money in a bank

• The system by which a government collects money from citizens and businesses

• The act of spending money on goods and services

• The method of creating new jobs

Tags

GA.SS.12.SSEPF5

Which term describes the money left after all taxes have been paid?

• Gross income

• Disposable income

• Net worth

• Taxable income

Tags

GA.SS.12.SSEPF5

What is the primary purpose of taxation?

• To encourage saving

• To fund government services and programs

• To increase individual wealth

• To reduce government spending

Tags

GA.SS.12.SSEPF5

If a government reduces sales tax, how might this affect consumer spending?

• Spending will likely decrease

• Spending will likely increase

• There will be no effect

• Saving will decrease

Tags

GA.SS.12.SSEPF5

How could an increase in property taxes influence an individual's saving behavior?

• Individuals may save more to pay higher taxes

• Individuals may save less due to higher expenses

• Individuals will not change their saving habits

• Individuals will spend more

Tags

GA.SS.12.SSEPF5

A government increases the tax rate on interest earned from savings accounts. What is a possible effect on individuals' saving behavior?

• Individuals may be encouraged to save more

• Individuals may be discouraged from saving

• Individuals will not change their saving habits

• Individuals will spend less

Tags

GA.SS.12.SSEPF5

A government is considering two options: increasing income tax or increasing sales tax. Which group is more directly affected by an increase in income tax?

• Only businesses

• Individuals who earn wages or salaries

• Only retirees

• Only consumers of luxury goods

Tags

GA.SS.12.SSEPF5

Suppose a government reduces taxes on retirement savings accounts. How might this policy influence individuals' long-term financial planning?

• Individuals may be less likely to save for retirement

• Individuals may be more likely to increase contributions to retirement accounts

• Individuals will spend more on current consumption

• Individuals will not change their financial plans

Tags

GA.SS.12.SSEPF5

An individual is deciding between spending a tax refund or saving it. If the government announces a future tax increase, what is a strategic reason for choosing to save the refund?

• To have more money for immediate spending

• To prepare for higher future expenses due to increased taxes

• To avoid paying taxes on the refund

• To increase current consumption

Tags

GA.SS.12.SSEPF5

What describes an income tax?

• A tax on sales transactions.
• A tax on wages, salary, or tips.

• A tax on property value.
• A tax on capital gains.