Question 1

A tax is said to be progressive if:

Accepted Answer

A) the absolute size of the tax (in dollars)increases as income increases. 
B) the wealthy pay a smaller percentage of their income than the poor. 
C) the average tax rate falls as income rises. 
D) the proportion of income paid as taxes increases as income increases. 
E) the proceeds are used to pay for liberal political programs. 
A) the absolute size of the tax (in dollars)increases as income increases. 
B) the wealthy pay a smaller percentage of their income than the poor. 
C) the average tax rate falls as income rises. 
D) the proportion of income paid as taxes increases as income increases. 
E) the proceeds are used to pay for liberal political programs. D

Question 2

Mark and Charles are roommates at college.Each has written a 25-page term paper for the same English class.They are equally poor typists.Charles types his own paper and gets paid by Mark to type his,too.On the basis of the information given,which one of the following must be true?

Accepted Answer

A) Mark is wealthier than Charles. 
B) Mark needs more time to study than Charles. 
C) Charles hates typing. 
D) Mark and Charles have different utilities for typing but place the same value on time. 
E) Mark's opportunity cost of typing is higher than Charles's. 
A) Mark is wealthier than Charles. 
B) Mark needs more time to study than Charles. 
C) Charles hates typing. 
D) Mark and Charles have different utilities for typing but place the same value on time. 
E) Mark's opportunity cost of typing is higher than Charles's. E

Question 3

Mr.Thomson had a before-tax income of $20,000 and paid taxes of $2,000.Ms.Lynch had a before-tax income of $10,000 and paid taxes of $1,500.Based on this information,which of the following is correct?

Accepted Answer

A) The tax system is progressive for incomes below $10,000. 
B) The tax system is proportional. 
C) The tax system is regressive. 
D) The tax system is based on the benefits received. 
E) The tax system is progressive for incomes above $20,000. 
A) The tax system is progressive for incomes below $10,000. 
B) The tax system is proportional. 
C) The tax system is regressive. 
D) The tax system is based on the benefits received. 
E) The tax system is progressive for incomes above $20,000. C

Question 4

Contracts are enforced by:

Accepted Answer

A) the firms that make the contracts through buy-out clauses. 
B) law firms that specialize in contract enforcement. 
C) corporations specializing in contract writing and enforcement. 
D) government through the judicial system. 
E) both households and firms through customer relations departments. 
A) the firms that make the contracts through buy-out clauses. 
B) law firms that specialize in contract enforcement. 
C) corporations specializing in contract writing and enforcement. 
D) government through the judicial system. 
E) both households and firms through customer relations departments.

Question 5

The most common form of business organization in the United States is the sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 6

Restricting imports of Brazilian shoes will:

Accepted Answer

A) raise the price of both Brazilian and domestically produced shoes. 
B) raise the price of Brazilian shoes but lower the price of domestically produced shoes. 
C) lower the price of Brazilian shoes but raise the price of domestically produced shoes. 
D) lower the price of both Brazilian and domestically produced shoes. 
E) benefit the producers of shoes in Brazil. 
A) raise the price of both Brazilian and domestically produced shoes. 
B) raise the price of Brazilian shoes but lower the price of domestically produced shoes. 
C) lower the price of Brazilian shoes but raise the price of domestically produced shoes. 
D) lower the price of both Brazilian and domestically produced shoes. 
E) benefit the producers of shoes in Brazil.

Question 7

The objective of the household is to:

Accepted Answer

A) maximize household wealth. 
B) own as much land as possible. 
C) save as much money as possible. 
D) acquire as many goods as possible. 
E) maximize utility. 
A) maximize household wealth. 
B) own as much land as possible. 
C) save as much money as possible. 
D) acquire as many goods as possible. 
E) maximize utility.

Question 8

A major advantage of the corporate form of business organization is the limited personal liability of the owners.

Accepted Answer

A) True 
 B)False

Question 9

Owners of corporations are referred to most frequently as:

Accepted Answer

A) entrepreneurs. 
B) lien holders. 
C) limited partners. 
D) managers. 
E) stockholders. 
A) entrepreneurs. 
B) lien holders. 
C) limited partners. 
D) managers. 
E) stockholders.

Question 10

Which of the following is not a reason why some production continues in households?

Accepted Answer

A) Some household production requires many specialized resources. 
B) The opportunity cost of household production has decreased over time. 
C) Household production avoids taxes. 
D) There have been important technological advances in household production. 
E) Some households prefer the ability to control production. 
A) Some household production requires many specialized resources. 
B) The opportunity cost of household production has decreased over time. 
C) Household production avoids taxes. 
D) There have been important technological advances in household production. 
E) Some households prefer the ability to control production.

Question 11

The overall U.S.balance of payments:

Accepted Answer

A) shows a deficit. 
B) shows a surplus. 
C) is the merchandise trade balance. 
D) equals exports minus imports. 
E) shows how deficits in one account are exactly offset by surpluses in other accounts. 
A) shows a deficit. 
B) shows a surplus. 
C) is the merchandise trade balance. 
D) equals exports minus imports. 
E) shows how deficits in one account are exactly offset by surpluses in other accounts.

Question 12

Under a regressive income tax system,individuals with higher incomes pay higher marginal tax rates.

Accepted Answer

A) True 
 B)False

Question 13

Household production increases when there is a stronger desire to avoid taxation.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is true of progressive tax?

Accepted Answer

A) People who make more money pay less total taxes. 
B) The marginal tax rate increases as income increases. 
C) The percentage of income paid out decreases as income increases. 
D) People who are poor receive the proceeds of the tax. 
E) The percentage of income paid out increases as income decreases. 
A) People who make more money pay less total taxes. 
B) The marginal tax rate increases as income increases. 
C) The percentage of income paid out decreases as income increases. 
D) People who are poor receive the proceeds of the tax. 
E) The percentage of income paid out increases as income decreases.

Question 15

Which of the following is an advantage of a sole proprietorship?

Accepted Answer

A) The ability to pool resources 
B) Limited liability 
C) Double tax exemption of the firm's earnings 
D) Ease of organization 
E) Ease of raising funds 
A) The ability to pool resources 
B) Limited liability 
C) Double tax exemption of the firm's earnings 
D) Ease of organization 
E) Ease of raising funds

Question 16

In terms of the numbers of firms in the U.S.economy,the most common type of firm is the:

Accepted Answer

A) corporation. 
B) partnership. 
C) sole proprietorship. 
D) nonprofit organization. 
E) limited partnership corporation. 
A) corporation. 
B) partnership. 
C) sole proprietorship. 
D) nonprofit organization. 
E) limited partnership corporation.

Question 17

The increased labor force participation of married women in the United States is most often explained by:

Accepted Answer

A) declining productivity in agricultural production. 
B) a rise in average household size. 
C) increased education and an increased demand for labor. 
D) the decreased opportunity cost of working in the home. 
E) declining productivity in household production. 
A) declining productivity in agricultural production. 
B) a rise in average household size. 
C) increased education and an increased demand for labor. 
D) the decreased opportunity cost of working in the home. 
E) declining productivity in household production.

Question 18

Which of the following is a justification for taxes?

Accepted Answer

A) The ability-to-pay principle 
B) The progressive tax principle 
C) The proportional tax principle 
D) The regressive tax principle 
E) The desire of government to spend more funds 
A) The ability-to-pay principle 
B) The progressive tax principle 
C) The proportional tax principle 
D) The regressive tax principle 
E) The desire of government to spend more funds

Question 19

Households act as demanders when they demand:

Accepted Answer

A) that corporate executives and government officials be held accountable for their actions. 
B) dividends from the stocks they hold.interest and capital gains from the bonds they hold. 
C) interest and capital gains from the bonds they hold. 
D) goods and services from firms and governments. 
E) payment for the goods and services they sell to firms and governments. 
A) that corporate executives and government officials be held accountable for their actions. 
B) dividends from the stocks they hold.interest and capital gains from the bonds they hold. 
C) interest and capital gains from the bonds they hold. 
D) goods and services from firms and governments. 
E) payment for the goods and services they sell to firms and governments.

Question 20

Which of the following is most likely to be a partnership?

Accepted Answer

A) Uncle Mort's Red Wrigglers 
B) The accounting firm of Hope and Williams 
C) General Motors 
D) The Boston Symphony Orchestra 
E) The U.S.Post Office 
A) Uncle Mort's Red Wrigglers 
B) The accounting firm of Hope and Williams 
C) General Motors 
D) The Boston Symphony Orchestra 
E) The U.S.Post Office

A tax is said to be progressive if:

Mark and Charles are roommates at college.Each has written a 25-page term paper for the same English class.They are equally poor typists.Charles types his own paper and gets paid by Mark to type his,too.On the basis of the information given,which one of the following must be true?

Mr.Thomson had a before-tax income of $20,000 and paid taxes of $2,000.Ms.Lynch had a before-tax income of $10,000 and paid taxes of $1,500.Based on this information,which of the following is correct?

Contracts are enforced by:

The most common form of business organization in the United States is the sole proprietorship.

Restricting imports of Brazilian shoes will:

The objective of the household is to:

A major advantage of the corporate form of business organization is the limited personal liability of the owners.

Owners of corporations are referred to most frequently as:

Which of the following is not a reason why some production continues in households?

The overall U.S.balance of payments:

Under a regressive income tax system,individuals with higher incomes pay higher marginal tax rates.

Household production increases when there is a stronger desire to avoid taxation.

Which of the following is true of progressive tax?

Which of the following is an advantage of a sole proprietorship?

In terms of the numbers of firms in the U.S.economy,the most common type of firm is the:

The increased labor force participation of married women in the United States is most often explained by:

Which of the following is a justification for taxes?

Households act as demanders when they demand:

Which of the following is most likely to be a partnership?

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Exam 3: Economic Decision Makers

A tax is said to be progressive if:

Mark and Charles are roommates at college.Each has written a 25-page term paper for the same English class.They are equally poor typists.Charles types his own paper and gets paid by Mark to type his,too.On the basis of the information given,which one of the following must be true?

Mr.Thomson had a before-tax income of $20,000 and paid taxes of $2,000.Ms.Lynch had a before-tax income of $10,000 and paid taxes of $1,500.Based on this information,which of the following is correct?

Contracts are enforced by:

The most common form of business organization in the United States is the sole proprietorship.

Restricting imports of Brazilian shoes will:

The objective of the household is to:

A major advantage of the corporate form of business organization is the limited personal liability of the owners.

Owners of corporations are referred to most frequently as:

Which of the following is not a reason why some production continues in households?

The overall U.S.balance of payments:

Under a regressive income tax system,individuals with higher incomes pay higher marginal tax rates.

Household production increases when there is a stronger desire to avoid taxation.

Which of the following is true of progressive tax?

Which of the following is an advantage of a sole proprietorship?

In terms of the numbers of firms in the U.S.economy,the most common type of firm is the:

The increased labor force participation of married women in the United States is most often explained by:

Which of the following is a justification for taxes?

Households act as demanders when they demand:

Which of the following is most likely to be a partnership?

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters