ECONOMICS CHAPTER 9 2026 QUESTIONS
AND CORRECT ANSWERS A+ STUDY
GUIDE COMPREHENSIVE EXAM REVIEW
AND PRACTICE TEST
value added tax - CORRECT ANSWER-tax placed on the value that
manufacturers add at each stage of production
flat tax - CORRECT ANSWER-proportional tax on individual income after
a specified threshold has been reached
describe four major tax reform bills - CORRECT ANSWER-Economic
Recovery Tax Act of 1981
Taxpayer Relief Act of 1997
Omnibus Budget Reconciliation Act of 1993
sweeping tax reform 1986
explain the advantages and disadvantages of the VAT - CORRECT
ANSWER-advantages: hard to avoid the tax collector levies it on the total
amount of sales less the cost of inputs, tax incidence is widely spread, easy
to collect, affect people's behavior in a manner that encourages them to
save money
disadvantages: tends to be invisible to consumers, compete with state sales
taxes
, describe the features of the flat tax - CORRECT ANSWER-proportional tax
on individual income after a specified threshold has been reached
identify three forces that are likely to cause future revision of the tax code -
CORRECT ANSWER-the tax code is more complex now than ever
economic growth is uneven
unexpected political events may require additional, unplanned
expenditures
political change is not like economic change list the ways that taxes
influence the economy - CORRECT ANSWER-affect resource allocation
consumer behavior
nation's productivity and growth
sin tax - CORRECT ANSWER-relatively high tax designed to raise revenue
and reduce consumption of a socially undesirable product
incidence of a tax - CORRECT ANSWER-the final burden of the tax
tax loophole - CORRECT ANSWER-exceptions or oversights in the tax law
that allow some people and businesses to avoid paying taxes
individual income tax - CORRECT ANSWER-the tax on people's earnings
AND CORRECT ANSWERS A+ STUDY
GUIDE COMPREHENSIVE EXAM REVIEW
AND PRACTICE TEST
value added tax - CORRECT ANSWER-tax placed on the value that
manufacturers add at each stage of production
flat tax - CORRECT ANSWER-proportional tax on individual income after
a specified threshold has been reached
describe four major tax reform bills - CORRECT ANSWER-Economic
Recovery Tax Act of 1981
Taxpayer Relief Act of 1997
Omnibus Budget Reconciliation Act of 1993
sweeping tax reform 1986
explain the advantages and disadvantages of the VAT - CORRECT
ANSWER-advantages: hard to avoid the tax collector levies it on the total
amount of sales less the cost of inputs, tax incidence is widely spread, easy
to collect, affect people's behavior in a manner that encourages them to
save money
disadvantages: tends to be invisible to consumers, compete with state sales
taxes
, describe the features of the flat tax - CORRECT ANSWER-proportional tax
on individual income after a specified threshold has been reached
identify three forces that are likely to cause future revision of the tax code -
CORRECT ANSWER-the tax code is more complex now than ever
economic growth is uneven
unexpected political events may require additional, unplanned
expenditures
political change is not like economic change list the ways that taxes
influence the economy - CORRECT ANSWER-affect resource allocation
consumer behavior
nation's productivity and growth
sin tax - CORRECT ANSWER-relatively high tax designed to raise revenue
and reduce consumption of a socially undesirable product
incidence of a tax - CORRECT ANSWER-the final burden of the tax
tax loophole - CORRECT ANSWER-exceptions or oversights in the tax law
that allow some people and businesses to avoid paying taxes
individual income tax - CORRECT ANSWER-the tax on people's earnings
