2026/2027 RMI TEST 2 – QUIZZES 5–11 | EXAM
REVIEW, PRACTICE QUESTIONS & ANSWERS
tax wedge - Correct answer✅✅ The sum of all taxes withheld from wages and salary
Societal Happiness Line of Thinking - Correct answer✅✅ idea that replaces an individualized version of
well-being with a top-down approach.
Production Costs inflicted upon a third party are negative externalities. These can be corrected by: -
Correct answer✅✅ Enacting legislation or regulation
Targeting specific products for taxation
Owners of an organization want to maximize company profits and stock prices while agents (managers)
want high pay, regardless of company performance. This is referred to as: - Correct answer✅✅ the
principal-agent problem
According to Mill, the goal of moral and political action should be to maximize people's: - Correct
answer✅✅ Happiness
How can positive externalities be corrected? - Correct answer✅✅ subsidizing consumers, suppliers
and allowing the government to provide goods
According to Chapter 5, how do most people in the US earn income? - Correct answer✅✅ wages and
salaries (work for others)
Which of the following is the most popular ownership structure within the U.S.? - Correct answer✅✅
sole proprietorship
According to Chapter 5, which of the following does NOT describe a method of income disposal? -
Correct answer✅✅ Personal savings, personal taxes and personal consumption expenditures describe
income disposal.
, In 1941 households paid approximately 3% of their income in federal income taxes. In the 2000's, this
percentage has grown to almost: - Correct answer✅✅ 15%
Whar represents the largest spending of Local revenues? - Correct answer✅✅ Education
According to chapter 3, who urged politicians to design policies that would maximize people's
happiness? - Correct answer✅✅ Bentham
The government stabilizes the economy by balancing: - Correct answer✅✅ unemployment
inflation
Limited liability AND ease of expansion are advantages to which of the following? - Correct answer✅✅
corporations
The portion of household income that is NOT paid in taxes or used to purchase goods is: - Correct
answer✅✅ personal savings
State Governments most commonly generate revenue through: - Correct answer✅✅ state income
taxes and sales taxes
Molly goes to the grocery store and spends $75 on food. According to chapter 3, which of the following
describes her purchase? - Correct answer✅✅ A non-durable good; it has a life expectancy of less than
3 years.
According to Chapter 5 which of the following is NOT a role of the government: - Correct answer✅✅
minimizing competition
Redistributing Income, providing a structure and promoting stability are - Correct answer✅✅
Government roles
A bias can be described by which of the following? - Correct answer✅✅ subjective view
REVIEW, PRACTICE QUESTIONS & ANSWERS
tax wedge - Correct answer✅✅ The sum of all taxes withheld from wages and salary
Societal Happiness Line of Thinking - Correct answer✅✅ idea that replaces an individualized version of
well-being with a top-down approach.
Production Costs inflicted upon a third party are negative externalities. These can be corrected by: -
Correct answer✅✅ Enacting legislation or regulation
Targeting specific products for taxation
Owners of an organization want to maximize company profits and stock prices while agents (managers)
want high pay, regardless of company performance. This is referred to as: - Correct answer✅✅ the
principal-agent problem
According to Mill, the goal of moral and political action should be to maximize people's: - Correct
answer✅✅ Happiness
How can positive externalities be corrected? - Correct answer✅✅ subsidizing consumers, suppliers
and allowing the government to provide goods
According to Chapter 5, how do most people in the US earn income? - Correct answer✅✅ wages and
salaries (work for others)
Which of the following is the most popular ownership structure within the U.S.? - Correct answer✅✅
sole proprietorship
According to Chapter 5, which of the following does NOT describe a method of income disposal? -
Correct answer✅✅ Personal savings, personal taxes and personal consumption expenditures describe
income disposal.
, In 1941 households paid approximately 3% of their income in federal income taxes. In the 2000's, this
percentage has grown to almost: - Correct answer✅✅ 15%
Whar represents the largest spending of Local revenues? - Correct answer✅✅ Education
According to chapter 3, who urged politicians to design policies that would maximize people's
happiness? - Correct answer✅✅ Bentham
The government stabilizes the economy by balancing: - Correct answer✅✅ unemployment
inflation
Limited liability AND ease of expansion are advantages to which of the following? - Correct answer✅✅
corporations
The portion of household income that is NOT paid in taxes or used to purchase goods is: - Correct
answer✅✅ personal savings
State Governments most commonly generate revenue through: - Correct answer✅✅ state income
taxes and sales taxes
Molly goes to the grocery store and spends $75 on food. According to chapter 3, which of the following
describes her purchase? - Correct answer✅✅ A non-durable good; it has a life expectancy of less than
3 years.
According to Chapter 5 which of the following is NOT a role of the government: - Correct answer✅✅
minimizing competition
Redistributing Income, providing a structure and promoting stability are - Correct answer✅✅
Government roles
A bias can be described by which of the following? - Correct answer✅✅ subjective view
