AnswersHSA 26-27 EconomicsFiscal Policy: Taxes

Fiscal Policy: Taxes — Cumulative exam Answers

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1
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Opportunity cost means that something needs to be

A
replenished.
B
given up.
C
ignored.
D
paid for.
2
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Which of the following are taxes on income or wealth that individuals pay in the United States? Select three options.

A
property tax on a home
B
income earned from wages
C
sales tax on clothing
D
excise tax on gasoline
E
profits from investments
3

When a government decides to limit the number of goods that can be sold to another nation, that government is creating

A
monetary policy.
B
trade policy.
C
fiscal policy.
D
regulatory policy.
4

A possible result of disequilibrium is

A
excess demand.
B
lower demand.
C
fixed prices.
D
stable availability.
5

[BLANK]

A
private
B
close
C
factor
6

US federal income tax is progressive by law, but which best explains why wealthy individuals can often pay far less in taxes than the top tax rate?

A
High-income earners can fight in court for the right to a reduced rate.
B
High-income earners reduce their tax rates through numerous deductions.
C
High-income earners use tax laws to their advantage to reduce their tax rates.
D
High-income earners always place their assets overseas to lower their tax rates.
7

The chart shows the marginal cost and marginal revenue of producing apple pies.What most likely will happen if the pie maker bakes a seventh pie?

Question illustration
A
The marginal cost will most likely decrease to $1.00
B
The marginal cost will most likely increase to $2.00
C
The marginal revenue will most likely decrease to $8.00.
D
The marginal revenue will most likely increase to $12.00.
8

Which of the following is influenced by personal economic choices? Choose four answers.

A
the cost of your rent and utilities
B
the resources you have available
C
the amount of money you spend on a bus pass
D
the money you decide to spend on leisure products
E
the amount of money you put into your savings account
F
the manner in which you balance your time between work and leisure
9

Which is the most liquid form of money?

A
cash and currency in circulation
B
investment accounts
C
savings accounts
D
demand accounts
10

Which is an example of how a denomination is divisible?

A
An American dollar may equal one-half of one Euro.
B
An American dollar is equal to four quarters.
C
Three American dollars may buy a small snack.
D
Five American dollars may be worth less next year.
11

This table shows the production possibility schedule for several major manufacturing companies in the automobile industry. Manufacturing CompanyTruck Parts Car PartsCompany A10 per hr.20 per hr.Company B10 per hr.25 per hr.Company C15 per hr.15 per hr.Company D20 per hr.25 per hr. Which manufacturing company has the comparative advantage for car parts?

A
Company A
B
Company B
C
Company C
D
Company D
12

A clothing store has ordered a new supply of jeans for the fall season and wants to sell off the remaining items from the previous spring. What action would the store owner most likely take?

A
The store owner would most likely raise the price of the spring jeans to encourage producers.
B
The store owner would most likely lower the price of the spring jeans to encourage producers.
C
The store owner would most likely raise the price of the spring jeans to encourage consumers.
D
The store owner would most likely lower the price of the spring jeans to encourage consumers.
13

Why is pure competition considered an unsustainable system?

A
Price differentiation is often too minimal to matter.
B
Few barriers exist to entry, meaning that the market inevitably floods.
C
Consumers cannot distinguish between products.
D
Producers cannot make a profit if they keep dropping their prices.
14

Motherboards, Inc., manufactures computer parts. The company’s total revenue is

A
the money the company earns after paying all of its production costs.
B
the total wages the company pays workers in its factories and stores.
C
the amount of money the company earns from selling an individual part.
D
the amount the company receives from the sale of all of its computer parts.
15

Which best describes why governments collect taxes?

A
to control the value of currency
B
to keep the government running
C
to ensure surplus funds
D
to fund government programs
16

[BLANK]

A
nominal measurement
B
consumer price index
C
annual rate
D
US Bureau of Labor statistic
17

Spending that can change from year to year is known as

A
discretionary spending.
B
deficit spending.
C
mandatory spending.
D
expansionary spending.
18

John has a large apple orchard. He has decided to bake pies and sell them at the local farmer’s market. Which best describes John’s use of economics?

A
John is using available and renewable resources.
B
John is relying on inexpensive labor costs to improve profits.
C
John is using resources to produce both goods and services.
D
John is assuming consumers will have limited need for his product.
19

The government of Country C has passed a law protecting the physical safety of factory workers. This is an example of

A
monetary policy.
B
supply and demand.
C
fiscal policy.
D
regulatory policy.
20

What are some ways to address unemployment in a market economy? Select three answers.

A
creating new projects
B
increasing regulation
C
lowering restrictions
D
raising more taxes
E
promoting hiring

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