Answers EconomicsBusiness and Government

Practice Test Answers

6 verified answers

Which best describes why governments collect taxes?

to ensure surplus funds

to control the value of currency

to keep the government running

to fund government programs

What part does interest play in deficit spending?

Interest is not a factor when a government’s budget is in deficit.

Governments must pay interest on money they borrow when they take on debt.

Citizens must pay interest when their governments borrow money.

Governments may charge foreign countries interest when they borrow money.

Successful entrepreneurs contribute to the economy by

encouraging free trade.

creating business strategies.

becoming wealthy.

expanding markets.

Which best describes a regressive tax?

a tax that charges low-income earners a lower percentage than high-income earners

a tax that charges high-income earners a lower percentage than low-income earners

a tax that charges earners based on their professions

a tax that charges an equal percentage to all

The development of many new businesses helps limit

unemployment.

risk.

taxation.

revenue.

Expansionary spending takes place when a government makes the decision to

raise taxes to balance its budget.

put a freeze on the number of its employees.

raise spending to stimulate the economy.

raise taxes to run a budget surplus.

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