Questions on Tax and the U.S. Law

Pages: 9 (2269 words) Published: December 3, 2014
1. Proprietary income refers to: 
A. revenue flowing to the government from taxes.
B. money borrowed by the government to finance its operations. C. revenue generated by government-run businesses.
D. transfer payments from the government to the owners of property resources. 2. The addition of government to the circular-flow model illustrates that government:  A. purchases resources in the resource market.

B. provides services to businesses and households.
C. purchases goods in the product market.
D. does all of these.
3. Total governmental purchases—Federal, state, and local combined—account for about what percentage of domestic output?  A. 35 percent
B. 20 percent
C. 10 percent
D. 5 percent
 
4. Government purchases and transfer payments: 
A. differ because the latter absorb resources while the former do not. B. differ because the former absorb resources while the latter do not. C. are alike because both are more inflationary than private spending. D. are alike because both absorb resources.

5. The opportunity cost of borrowing funds to finance government deficits is:  A. greatest when the economy is doing well.
B. greatest when the economy is in a recession.
C. zero.
D. the same regardless of the state of the economy.
 6. The largest source of tax revenue for the U.S. Federal government is:  A. personal income taxes.
B. property taxes.
C. corporate income taxes.
D. sales and excise taxes.
7. In determining one's personal income tax, taxable income is:  A. total income less deductions and exemptions.
B. all income.
C. all income other than wages and salaries.
D. wage and salary income only.
 8. The largest category of Federal spending is for: 
A. health care.
B. science, space, and technology.
C. pensions and income security.
D. national defense.
9. Which of the following is not an important source of revenue for the Federal government?  A. corporate income taxes
B. property taxes
C. payroll taxes
D. personal income taxes
10. An income tax is progressive if the: 
A. absolute amount paid as taxes varies directly with income. B. percentage of income paid as taxes is the same regardless of the size of income. C. percentage of income paid as taxes increases as income increases. D. tax rate varies inversely with income.

11. The marginal tax rate is: 
A. the difference between the total tax rate and the average tax rate. B. the percentage of total income paid as taxes.
C. change in taxes/change in taxable income.
D. total taxes/total taxable income.

12. The basic tax rate on taxable corporate income is: 
A. 15 percent.
B. 22 percent.
C. 35 percent.
D. 52 percent.

13. Taxes on commodities or on purchases are known as: 
A. corporate income taxes
B. sales and excise taxes
C. personal income taxes
D. payroll taxes

14. Refer to the above diagram, in which solid arrows reflect real flows; broken arrows are monetary flows. Flow (1) might represent:  A. corporate income tax payments.
B. government provision of highways for truck transportation. C. business property tax payments.
D. transfer payments to low-income families.

15. Refer to the above diagram, in which solid arrows reflect real flows; broken arrows are monetary flows. Flow (2) might represent:  A. the provision of national defense by government.
B. a government subsidy to farmers.
C. corporate income tax payments.
D. welfare payments to low-income families.
16. Refer to the above diagram, in which solid arrows reflect real flows; broken arrows are monetary flows. Flow (4) might represent:  A. the services of NASA astrophysicists.
B. the purchase of Stealth bombers.
C. personal income taxes.
D. investment spending by private corporations.
 
17. Refer to the above diagram, in which solid arrows reflect real flows; broken arrows are monetary flows. Flow (6) might represent:  A. the payment of payroll taxes by households.
B. corporate income tax payments.
C. the...
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