MCQs on tax system.

1) The federal income tax is a good ex of a

1. regressive tax.

2. proportional tax.

3. digressive tax.

4. progressive tax.

2) The federal income tax began in the United States with the

1. Morrill Act of 1862

2. addition of the Bill of Rights to the Constitution in 1791

3. passage of the 16th Amendment to the Constitution in 1913

4. New Deal legislation of the 1930s.

3) The largest single category of expenditures in the federal budget is traditionally

1. national defence

2. interest on the national debt.

3. health and public housing programs.

4. pensions and income security programs.

4) An excise tax

1. is a sales tax on the purchase of a particular good or service

2. is a tax on the profits earned from the sale of an asset.

3. represents a surcharge on corporate profits beyond the normal corporate tax rate

4. is a tax on income-earning rental property.

5) The money for Social Security payments to current retirees comes from

1. payroll taxes collected from those retirees when they were working

2. income taxes collected from the current working population.

3. payroll taxes collected from the current working population.

4. only the interest earned now by the government on the invested Social Security trust fund

6) The method of financing the Social Security system until 1983 is best Discussd as

1. Trust fund

2. excise tax.

3. indirect tax.

4. "Pay as you go."

7) Which factor of production receives the greatest share of the U.S. national income?

1. land

2. labour

3. capital

4. entrepreneurship

8) The distribution of income in a market economy is determined by

1. the level of employment and prices of the factors of production.

2. the prices of factors of production.

3. largely unknown forces which economists seek to discover.

4. decisions of government offices related to distribution.

9) The demand for labour is derived from the

1. demand for leisure.

2. supply of labour.

3. Demand for final-output goods.

4. supply of final-output goods.

10) The substitution effect of a wage increase

1. probably leads most workers to want to work more

2. Certainly leads all workers to want to work more

3. probably leads most workers to want to work less.

4. certainly leads most companies to want to employ more workers.