Economics Topic 8 Review Questions with Correct Answers (Grade
A+)
Question 1: What type of tax takes a higher percentage of income from people with less income than
people with more income?
Answer: regressive
Question 2: If a 30 cent tax on a product causes the price to rise only 5 cents and the producer pays the
other 25 cents, then the demand is what for that good?
Answer: elastic
Question 3: If a tax is hard to understand, then it is missing what characteristic of good taxes?
Answer: simplicity
Question 4: If a tax increases as you make more money, then its goal is to be what kind of tax?
Answer: progressive
Question 5: If the President wants to reduce military presence in a region of the world, then what type
of spending does he want to change in the budget?
Answer: category= discretionary spending
Question 6: What effect will the baby boomers have on social security?
Answer: The ratio of existing workers to retirees will fall (cartoon on test)
Question 7: When political parties argue over Medicare, what point are they showing towards making
changes to Medicare?
Answer: politically it's difficult
Question 8: What type of spending programs are Social Security, Medicaid, and unemployment
insurance?
Answer: mandatory spending
Question 9: What type of tax (federal, state, or local) pays for maintenance of our water and sewage
plant in Zionsville?
Answer: local
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A+)
Question 1: What type of tax takes a higher percentage of income from people with less income than
people with more income?
Answer: regressive
Question 2: If a 30 cent tax on a product causes the price to rise only 5 cents and the producer pays the
other 25 cents, then the demand is what for that good?
Answer: elastic
Question 3: If a tax is hard to understand, then it is missing what characteristic of good taxes?
Answer: simplicity
Question 4: If a tax increases as you make more money, then its goal is to be what kind of tax?
Answer: progressive
Question 5: If the President wants to reduce military presence in a region of the world, then what type
of spending does he want to change in the budget?
Answer: category= discretionary spending
Question 6: What effect will the baby boomers have on social security?
Answer: The ratio of existing workers to retirees will fall (cartoon on test)
Question 7: When political parties argue over Medicare, what point are they showing towards making
changes to Medicare?
Answer: politically it's difficult
Question 8: What type of spending programs are Social Security, Medicaid, and unemployment
insurance?
Answer: mandatory spending
Question 9: What type of tax (federal, state, or local) pays for maintenance of our water and sewage
plant in Zionsville?
Answer: local
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