Economics- Unit 4 Exam Questions and Answers Rated A+

Economics- Unit 4 Exam Questions and Answers Rated A+ Read the sentence. The government decides to raise taxes to spend more on programs. What effect will this most likely have on the economy? Raising taxes will decrease aggregate demand. Read the scenario. Kim received a small raise at work so that her salary went from $58,000 per year to $60,000 per year. She is concerned that it might move her to the next tax bracket. Why would Kim be concerned about that? If she moves into another bracket, she will pay a higher percentage for a portion of her taxes. Which is an argument against the use of the ability-to-pay principal of taxation? It reduces the incentive to work hard and take risks to succeed. Which is an accurate comparison of corporate income taxes and individual income taxes? Corporate income taxes are less than a quarter of individual income taxes. What is true regarding tax revenue at the state level? Many states rely on sales taxes to generate revenue. Why is tax reform needed in the United States? The tax system has become overly complex and is losing some of its efficiency. What is true regarding transfer payments? They do not result in the purchase of a good by the federal government. What is an example of government expenditure that positively affects the economy? The government opens a military base in a small town, increasing demand for local products. What is the result of government spending on higher education? Public universities have lower tuition rates than do private universities. What is true about the federal budget? XXX Congress is required to balance the budget each year. XXX Congress cannot remove anything from the budget unless the president agrees. What role do state governments play in funding education? They provide significant funds for education. Social welfare programs enacted by the government to help people in need focus on which primary areas? (Select all that apply.) food housing medical care What is the difference between government deficit and national debt? Government deficit is a yearly discrepancy; national debt is accumulated over time. What is true about the United States national debt? It requires the government to pay large yearly interest payments. How does the federal debt impact the economy? It can slow growth by decreasing consumer confidence. How would a balanced budget amendment to the Constitution discourage deficit spending? It would require that, in a new budget, expenses could not exceed revenue in most situations. Which type of discretionary spending usually has wide support? spending that helps a large group What is the largest area of federal discretionary spending each year? defense spending Why does money need to be in limited supply? to protect its value Read the sentences. An important function of money is to act as a store of value. Gold is excellent as a store of value. What is a difficulty with using gold as money? It is difficult to divide into smaller units. Which is true about central banking in the United States? XXX It began with the Banking Act of 1863. XXX It ended with the creation of the Federal Reserve Bank. What do savings and loans specialize in? making real estate loans What is automatic bill pay? a system people can use to have their bills paid each month from their bank account What are the purposes of financial intermediaries? (Select three that apply.) 0.17 of 1 enable people to earn a profit storing money XXX enable people to day-trade stocks and bonds XXX enable people to purchase a certificate of deposit (CD) What are examples of banking financial intermediaries? (Select all that apply.) credit unions commercial banks savings and loans What are examples of nonbank financial intermediaries? (Select all that apply.) finance companies life insurance companies Which accurately describes a 401(k) plan? a tax deferred retirement plan offered by employers Which accurately describes a money market account? a savings account at a bank that requires a high minimum balance Which type of bond is considered the safest and offers the least amount of risk? treasury bond