In order for the government to collect taxes, the government must first establish a(n)
A) ad valorem taxation.
B) tax base.
C) philosophy of taxation.
D) justice system.
Ques. 2In the U.S. economy, which of the following is NOT a generally accepted economic function of government?
A) providing public goods
B) distributing consumer goods
C) ensuring economy-wide stability
D) promoting competition in the marketplace
Ques. 3The law of increasing opportunity cost implies that
A) producing additional units of one good results in proportionately smaller reductions in output of the other good.
B) producing additional units of one good results in increasing amounts of lost output of the other good.
C) the production possibilities curve will be a straight line.
D) the society will be producing on its production possibilities curve.
Ques. 4Media reports often suggest that the increasing public debt is a burden on future generations. What they mean is that
A) it reduces the current level of investment.
B) it makes predicting future unemployment levels unpredictable.
C) it causes deflation.
D) it reduces both nominal and real interest rates.
Ques. 5Which of the following are ways to ration goods and services?
A) price
B) physical force
C) political power
D) All of the above are correct.
Ques. 6In constructing models, economists
A) include all independent variables.
B) include all available information.
C) attempt to duplicate the real world.
D) make simplifying assumptions.
Ques. 7Kariuki decreases his consumption of grapes after his income goes up. For Kariuki
A) grapes and income are substitute goods.
B) grapes and income are complementary goods.
C) grapes are an inferior good.
D) grapes are a superior good.
Ques. 8Dynamic tax analysis generally predicts
A) that the higher the tax rate is, the higher the tax revenue will continue to be into the future.
B) that the higher tax rates lead to higher revenues only to a point at which revenues will begin to decrease due to a diminishing tax base.
C) that lower tax rates will always and continuously lead to increased tax revenues.
D) that lower tax rates are always going to lead to decreased tax revenues.
Ques. 9The law of increasing additional costs is due to
A) taxes.
B) scarcity.
C) the fact that it is more difficult to use resources efficiently the more society produces.
D) the fact that resources are not perfectly adaptable for alternative uses.
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