Multiple Choice Questions
1. Which of the following are important roles of the government?
a. Protecting property rights
b. Providing a legal system
c. Intervention when insufficient competition occurs in the marketplace
d. Promoting stability and economic growth
e. All of the above
2. Social Security and Medicare are financed by
a. Personal income taxes.
b. Payroll taxes.
c. Excise taxes.
d. Corporation income taxes.
e. None of the above taxes.
3. Who must legally pay Social Security and Medicare taxes?
a. Employers
b. Employees
c. Both employers and employees
d. Neither employers nor employees
4. Expenditures on ________________ comprise the largest component of state and local government budgets.
a. Education
b. Public safety
c. Public infrastructure (such as roads and water works)
d. Public welfare (such as food stamps and income supplemental programs)
5. __________________ taxes are designed to take a larger percentage of high incomes as compared to lower incomes.
a. Progressive
b. Regressive
c. Proportional
d. Negative
6. An example of a proportional tax would be
a. A state sales tax.
b. A local property tax.
c. A flat rate income tax.
d. The current U.S. income tax.
7. The largest single source of revenue for the federal government is the
a. Corporate income tax.
b. Federal excise tax.
c. Personal income tax.
d. Social Security tax.
8. Which is the largest single component of federal expenditures?
a. Interest on the national debt
b. Defense spending
c. Social Security
d. Foreign aid
9. The U.S. federal income tax is an example of a
a. Progressive tax.
b. Proportional tax.
c. Regressive tax.
d. Value-added tax.
10. The gasoline tax is an example of
a. Progressive taxation.
b. Neutral taxation.
c. Proportional taxation.
d. Regressive taxation.