Question

unit 3 quiz: the federal budget
part i: matching (2 points each)
match each term to its correct definition.
1.____income tax
2.____sales tax
3.____property tax
4.____tariff
5.____progressive tax
6.____regressive tax
a. a tax where people with higher
incomes pay a higher tax rate

b. a tax paid by businesses on imported
goods

c. a tax paid by consumers based on the
value of goods and services purchased

d. a tax where people with lower incomes
pay a higher tax rate

e. a tax paid by property owners based on
the value of their property

f. a payroll tax paid by workers based on
the amount of money they earn

part ii: multiple choice (2 points each)
circle the letter of the correct answer to each prompt.

1. the equation to calculate a persons net income is...

a. gross income - deductions.
b. gross income + deductions.
c. gross income - savings.
d. gross income + savings.

1. a dramatic increase in the money supply would most likely lead to...

a. increased unemployment.
b. a recession.
c. inflation.
d. no economic changes.

1. all of the following have been used as money in history except...

a. cows
b. cigarettes
c. silver
d. folding chairs

Explanation:

• Part I:
• Income tax: It is a payroll tax paid by workers based on the amount of money they earn. So, 1 - f.
• Sales tax: A tax paid by consumers based on the value of goods and services purchased. So, 2 - c.
• Property tax: A tax paid by property owners based on the value of their property. So, 3 - e.
• Tariff: A tax paid by businesses on imported goods. So, 4 - b.
• Progressive tax: A tax where people with higher incomes pay a higher tax rate. So, 5 - a.
• Regressive tax: A tax where people with lower incomes pay a higher tax rate. So, 6 - d.
• Part II:
• Question 7: Net income is calculated as Gross income - Deductions. So, the answer is a.
• Question 8: A dramatic increase in the money supply would most likely lead to inflation. So, the answer is c.
• Question 9: Folding chairs have not been used as money in history. Cows, cigarettes, and silver have been used as money. So, the answer is d.

Answer:

1. f, 2. c, 3. e, 4. b, 5. a, 6. d, 7. a, 8. c, 9. d