Unit 5 Test Flashcards
Why is taxation necessary?
control the money supply and manage economic growth
Which describes a sales tax?
percentage charged on the purchase of goods
What does a progressive taxation system do?
increases the tax rate as income rises
The World Trade Organization was formed in order to accomplish what?
promote free trade
Tariffs differ from taxes because tariffs are what?
collected on imported goods
Which government official is required by law to deliver a budget to the U.S. Congress?
the president
Politicians approve pork barrel spending for what purpose?
win political support
Which of these has been a trend in the twentieth century?
growing levels of government spending
Which is a public good?
national defense
Government corporations can be described as which of the following?
independently run
Which merit good does the U.S. government provide through a payroll tax?
health care
Why does the free-market system require government regulation?
Producers are driven by the profit motive to work against competition.
What does predatory pricing involve?
large company charging below its production cost in order to eliminate competition
Consumer-protection regulations are beneficial because they lead to what?
decrease in injuries and death
Why do government regulations lead to higher prices for consumers?
The costs of compliance are passed on to the consumer.
Which government behavior is not involved in consumer-protection regulations?
censorship
Which is provided by consumers in the circular flow of the free-market system?
labor and investment
What does the enforcement of antitrust laws do?
speeds up the flow of capital and wages
Which of these is an example of a labor law?
minimum-wage requirement
The government might enact a price ceiling in order to accomplish what?
protect the poor
What is the purpose of freezing someone’s assets?
reduce crime
Which of these is an example of a land-use law?
residential zoning ordinance
Parental freedom is limited by laws requiring what?
compulsory education
Environmental-protection laws are good for the economy because they do what?
safeguard resources needed for future production
Which is intended to collect revenue?
taxation
