Fiscal Policy: Taxes Answers
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Which best explains how contractionary policies can hamper economic growth?
A
They increase consumer demand.B
They can increase inflation.C
They reduce taxes which raises deficits.D
They reduce disposable income.2
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Which best describes how expansionary policies can facilitate economic growth?
A
They prompt decreased demand.B
They inspire consumer confidence.C
They increase disposable income.D
They help reduce consumer debt.3
This graph shows US government revenue and expenditures between 1980 and 2010.
T
The government spends less than it receives year over year.T
The government should produce more money to cover spending.T
The government on average spends more than it collects.T
The government needs to lower taxes to cover spending.4
High government expenditures can lead to a bigger
A
revenue.B
stimulus.C
deficit.D
surplus.5
How is an excise tax different from a sales tax?
A
An excise tax is not deductible.A
An excise tax applies to specific products.A
An excise tax applies only to imported goods.A
An excise tax is an indirect tax.6
Governments collect taxes to ensure that
t
there is sufficient money to fund private businesses.c
citizens contribute to meeting society's needs.p
politicians get paid in a timely manner.a
a government program exists for every need that arises.7
If expansionary taxation policies encourage growth, are they always appropriate to implement?
N
No, government services could encourage growth but other practices could be more effective based on the economic situation.Y
Yes, the private sector can easily and affordably replace all services and facilities cut by the government.N
No, the government is capable of providing many but not all services individuals and businesses need.Y
Yes, the government will still ensure that individuals and businesses continue to receive all necessary services.8
Under a contractionary taxation policy, the government can reduce the deficit by
i
increasing taxes.r
reducing taxes.i
increasing spending.i
increasing inflation.9
How are progressive taxes and regressive taxes similar?
A
Both charge high-income individuals more.B
Both are considered flat taxes.C
Both generate revenue for public services.D
Both are types of indirect taxes.10
Property taxes are usually determined based on
t
the property owner's income.t
the amount of money invested in the property.t
the earnings generated by the property.t
the value of the property.Did you find these answers helpful?
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