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Why is taxation necessary? |
To provide money for government programs |
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Why does the government need to collect taxes? |
To ensure competition and protect consumers |
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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 |
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A. Sales tax |
A. 7 percent charged on the purchase of all non-necessary goods B. $2 tax charged on each pack of cigarettes C. 1 percent charged on the value of all residential houses |
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A. Property tax |
A. 1 percent charged on the value of all residential houses B. 15 percent charged on all wages C. 5 percent charged on profits from selling stocks |
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A. Sales tax |
A. 9 percent charged on all purchases of non-necessities B. $1 tax charged on each gallon of gas purchased C. 5 percent charged on profits from selling stocks |
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What does a progressive taxation system do? |
It increases the tax rate as income rises. |
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What is a regressive tax? |
A tax that charges more to those with lower incomes |
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What is the justification of the progressive taxation method? |
The idea that taxation should be based on the ability-to-pay principle |
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The World Trade Organization was formed in order to accomplish what? |
Promote free trade |
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Countries are better able to negotiate free-trade agreements because of the existence of the which of the following? |
World Trade Organization |
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A trade agreement that creates favorable trade terms between two nations establishes which of the following? |
Normal Trade Relations |
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Tariffs differ from taxes because tariffs are what? |
Collected on imported goods |
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Taxes differ from tariffs because taxes are what? |
Collected on domestic economic activity |
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Which of the following is true about tariffs? |
They are paid on international trade only. |
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Sort the statements below into the correct order in which the federal budget is prepared |
1. The president gives a proposed budget to Congress. 2. Congress decides on the details of the budget. 3. The president signs spending bills into law. |
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Sort the statements below into the correct order in which the federal budget is prepared. |
1. The Office of Management and Budget (OMB) and the president prepare a proposed budget. 2. Congress decides on the overall level of spending and taxation and passes specific spending bills. 3. The president signs various spending bills into law. |
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Sort the statements below into the correct order in which the federal budget is prepared. |
1. The president writes a preliminary budget proposal. 2. Congress decides on the details of the budget. 3. The president signs spending bills into law. |
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Politicians approve pork barrel spending for what purpose? |
To win political support |
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Politicians can gain added support for themselves by approving what? |
Pork barrel projects |
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Pork barrel projects are approved because they do what? |
Help politicians win support from their constituents |
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Which of these has been a trend in the 20th century? |
Growing levels of government spending |
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How can recent government spending be best described? |
Constantly increasing |
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The 20th century has shown a trend toward greater what? |
Government spending |
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A. Merit good |
A. Education B. School buildings C. Textbooks |
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A. Retirement programs |
A. Merit good B. Public good C. Individual good |
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A. Health care |
A. Merit good B. Public good C. Individual good |
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Government corporations can be described as which of the following? |
Independently run |
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Government corporations can be described as which of the following? |
Private sector companies |
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Government agencies are which of the following? |
Part of the public sector |
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Which merit good does the U.S. government provide through a payroll tax? |
Health care |
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Which merit good does the U.S. government provide through a payroll tax? |
Retirement benefits |
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What merit good does the U.S. government pay for through the Medicaid payroll tax? |
Health care |
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Why does the free-market system require government regulation? |
Producers are driven by the profit motive to work against competition. |
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Government regulation of the free market is required in order to do what? |
Ensure competition and protect consumers |
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The free-market system cannot exist without government regulation for what reason? |
The profit motive undermines competition unless competition is protected. |
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What does predatory pricing involve? |
A large company charging below its production cost in order to eliminate competition |
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What does price fixing involve? |
A group of companies agreeing on a particular price to charge for their products |
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What does production limitation involve? |
A cartel setting a maximum output for the good that all members sell |
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Consumer-protection regulations are beneficial because they lead to what? |
A decrease in injuries and death |
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Consumer-protection regulations are beneficial because they increase what? |
Consumer confidence |
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One drawback to consumer-protection regulations is that they lead to what? |
Higher prices |
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Why do government regulations lead to higher prices for consumers? |
The costs of compliance are passed on to the consumer |
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Why do government regulations lead to higher prices for consumers? |
Producers pass along the costs of compliance. |
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What does complying with consumer-protection regulations do? |
Increases production costs and raises prices |
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Consumer-protection regulations donot involve what? |
Government censorship |
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Which of these isnot necessary for the enforcement of consumer-protection regulations? |
Censorship |
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What is one thing the government must do to enforce consumer-protection regulations? |
Test new products for safety and effectiveness |
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A. Consumers |
A. Providing investment capital B. Paying wages C. Collecting taxes |
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A. Consumer |
A. Provide labor and investment B. Provide individual goods C. Provide public goods |
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A. Provide labor |
A. Consumers B. Producers C. Governments |
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What does the enforcement of antitrust laws do? |
Speeds up the flow of capital and wages |
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What does increasing consumer confidence do? |
Increases purchases from producers |
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What speeds up the flow of investment and wages in the circular flow of the free-market system? |
Antitrust laws |
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Which of these is an example of a labor law? |
A minimum-wage requirement |
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Which of these is an example of a land-use law? |
A residential zoning ordinance |
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Which of these is an example of a trade restriction? |
A tariff on imported cars |
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The government might enact a price ceiling in order to accomplish what? |
Protect the poor |
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The government might enact a price floor in order to accomplish what? |
Protect producers |
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The government can prevent the shortages that accompany price ceilings by doing what? |
Rationing |
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What is the purpose of freezing someone’s assets? |
To reduce crime |
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What do banking regulations prohibit? |
Money laundering |
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What do capital controls prevent? |
Hasty movements of money into and out of a country’s economic system |
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A. Land-use law |
A. Limitation of two houses per acre in the residential section of a town B. Restriction of underage workers to 20 hours per week C. Requiring that 15 percent of assets be kept on hand in a vault |
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A. Price ceiling |
A. Limiting the price of a gallon of gas to $2 B. Charging a 50 percent tariff on imported cotton C. Requiring that all workers be paid at least $5.15 per hour |
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A. Trade restriction |
A. Charging a 70 percent tariff on imported steel B. Requiring unions to give 60 days notice before going on strike C. Requiring that money laundering be reported |
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Parental freedom is limited by laws requiring what? |
Compulsory education |
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Censorship is a government-imposed limit on which of the following? |
Individuals’ freedom of expression |
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Environmental-protection laws limit what? |
The exploitation of natural resources |
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Environmental-protection laws are good for the economy because they do what? |
Safeguard resources needed for future production |
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The passage of environmental-protection laws results in what? |
Higher prices |
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Environmental-protection laws can be bad for the economy because they may do what? |
Increase unemployment |
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A. Taxation |
A. To collect revenue B. To protect competition C. To control the population |
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A. Tariffs |
A. To protect domestic industry B. To guarantee free choice C. To safeguard natural resources |
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A. Subsidies |
A. To protect domestic industry B. To protect workers C. To protect competition |
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