MCQs on regulated market and tax system.

1) In an ideal free unregulated market

1. Supply curves reflect all negative externalities.

2. External benefits are abundant.

3. All individual and social needs are met by the market.

4. Optimal quantities of all goods and services are capable to produced

2) The prime engine of growth in market economies is

1. Government spending

2. Consumer spending

3. Innovation.

4. Private saving

5. Public saving

3) The unprecedented increase in living standards in the industrialized countries over the last two centuries is the result of

1. Growth in productivity of land

2. Growth in labour productivity.

3. Growth in output.

4. Population growth

5. Growth in government spending

4) Capitalism is a market economic system with

1. Most production processes controlled by the government.

2. Most production processes controlled by private companies with minimal government control.

3. All production processes controlled by private companies.

4. All production processes controlled by the government.

5. Most production processes controlled by the government, with some control by private companies.

5) Profit-maximizing companies will choose a level of spending on research and development, in the short run, where the

1. Marginal revenue from R&D is maximized

2. Total revenue from R&D is maximized

3. Marginal revenue from R&D is greater than its marginal cost.

4. Marginal cost of R&D is minimized

5. Marginal revenue from R&D is equal to its marginal cost.

5) Federal personal income tax rates were

1. Generally lowered in the 1980s and increased in the early 1990s.

2. Generally increased in the 1980s and lowered in the early 1990s.

3. Gradually lowered through the 1970s, 1980s, and early 1990s.

4. Held at a constant marginal tax rate until 1995

6) A tax system under which an individual pays a higher fraction of his income in taxes at higher levels of income is formally discussed as

1. Digressive

2. Progressive

3. Proportional

4. Regressive

7) A progressive income tax system can be defined as one in which

1. The government uses taxes paid by the wealthy to fund programs for the poor.

2. An individual pays more dollars in taxes when his income rises.

3. The marginal tax rate rises over time

4. The average tax rate is higher for individuals with higher incomes.

8) The main difference among direct and indirect taxes is which

1. Indirect taxes are automatically deducted from workers' pay checks and direct taxes are not.

2. Direct taxes are paid to state and local governments and indirect taxes are paid to the federal government.

3. Direct taxes are taxes levied on people and indirect taxes are taxes levied on activities undertaken by people

4. Direct taxes are usually proportional and indirect taxes are usually progressive

9) The largest single source of revenue for the federal government is the

1. Corporate income tax.

2. Federal excise tax.

3. Personal income tax.

4. Social Security tax.

10) The way in which most persons pay their personal income tax is in the form of

1. Quarterly payments throughout the year.

2. Annual payment by April 15

3. Monthly payments as part of mortgage payments.

4. Payroll withholding during the year.