Test Four

Government Taxation, Borrowing, Spending

The Federal Reserve

1. An example of a regressive tax is:

1. federal income tax
2. all residents pay the same percentage rate
3. Social Security *
4. higher income levels pay larger proportions

2. The GNP measures:

1. tax rates
2. national debt
3. economic activity *
4. social welfare programs

3. When the Federal Reserve sells bonds it:

1. causes a recession
2. doesn’t change the economy
3. takes money out of the economy *
4. puts money into the economy

4. Which statement best summarizes the purpose of imposing taxes:

1. to equate earnings of individual citizens
2. to give citizens responsibilities in participating in the government
3. to assist in financing government projects *
4. to balance the budget

5. What would be a result if the government stopped spending?

1. Lay off in government jobs *
2. A more efficient economy
3. More buying power for the consumer
4. An increase in spending in the private sector

6. Cite examples of how private citizens influence government spending.

7. Compare and contrast the functions of savings and loans with commercial banks.

8. What are the effects of government spending on individuals?

9. Create a new type of tax that would be the best of the types studied in this unit.

10. Determine the equability of higher personal income tax brackets paying a higher tax rate than lower personal income tax brackets.

(Please remove the *’s before printing)