Why is taxation necessary? |
To provide money for government programs |
Why does the government need to collect taxes? |
To ensure competition and protect consumers |
The government must force people to pay taxes so that it can do what? |
Make and enforce the laws necessary to make the free-market system work properly |
What does a progressive taxation system do? |
It increases the tax rate as income rises. |
What is a regressive tax? |
A tax that charges more to those with lower incomes |
What is the justification of the progressive taxation method? |
The idea that taxation should be based on the ability-to-pay principle |
The World Trade Organization was formed in order to accomplish what? |
Promote free trade |
A trade agreement that creates favorable trade terms between two nations |
Normal Trade Relations |
Tariffs differ from taxes because tariffs are what? |
Collected on imported goods |
Taxes differ from tariffs because taxes are what? |
. Collected on domestic economic activity |
Which of the following is true about tariffs? |
They are paid on international trade only. |
Politicians approve pork barrel spending for what purpose? |
. To win political support |
Which of these has been a trend in the 20th century? |
Growing levels of government spending |
How can recent government spending be best described? |
Constantly increasing |
Government corporations can be described as which of the following? |
Independently run Private sector companies |
Government agencies are which of the following? |
Part of the public sector |
Which merit good does the U.S. government provide through a payroll tax? |
Health care Retirement benefits |
Why does the free-market system require government regulation? |
Producers are driven by the profit motive to work against competition. |
What does predatory pricing involve? |
A large company charging below its production cost in order to eliminate competition |
What does price fixing involve? |
A group of companies agreeing on a particular price to charge for their products |
What does production limitation involve? |
A cartel setting a maximum output for the good that all members sell |
Consumer-protection regulations are beneficial because they lead to what? |
A decrease in injuries and death |
Why do government regulations lead to higher prices for consumers? |
the costs of compliance are passed on to the consumer. . Producers pass along the costs of compliance. |
What does complying with consumer-protection regulations do? |
. Increases production costs and raises prices |
Consumer-protection regulations do not involve what? |
Government censorship |
What is one thing the government must do to enforce consumer-protection |
. Test new products for safety and effectiveness |
What does the enforcement of antitrust laws do? |
. Speeds up the flow of capital and wages |
What does increasing consumer confidence do? |
Increases purchases from producers |
What speeds up the flow of investment and wages in the circular flow of the |
Antitrust laws |
Which of these is an example of a labor law? |
A minimum-wage requirement |
Which of these is an example of a land-use law? |
. A residential zoning ordinance |
Which of these is an example of a trade restriction? |
A tariff on imported cars |
The government might enact a price ceiling in order to accomplish what? |
. Protect the poor |
The government might enact a price floor in order to accomplish what? |
Protect producers |
The government can prevent the shortages that accompany price ceilings by |
Rationing |
What do banking regulations prohibit? |
Money laundering |
What do capital controls prevent? |
Hasty movements of money into and out of a country’s economic system |
Parental freedom is limited by laws requiring what? |
Compulsory education |
Censorship is a government-imposed limit on which of the following? |
Individuals’ freedom of expression |
Environmental-protection laws limit what? |
The exploitation of natural resources |
Environmental-protection laws are good for the economy because they do |
Safeguard resources needed for future production |
The passage of environmental-protection laws results in what? |
Higher prices |
Environmental-protection laws can be bad for the economy because they may |
Increase unemployment |
5.5.2Test (CST)- The Government Gets Involved
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