1. A ______ tax would charge a tax equal to the same percentage of people's income, regardless of income level.

regressive

marginal

progressive

flat

2. Vertical equity is the belief that people ______.

should be taxed equally regardless of income

should be taxed only if they derive benefits from a specific government service

with highre levels of income should be taxed at a higher rate

should be taxed based on how much they have already paid during their lifetime

3. The federal income tax is a regressive tax.

True

False

4. Progressive taxes are designed to make higher earners pay ______.

the same percentage but more total taxes than others

a higher percentage of their income in taxes than others

a lower percentageof their income in taxes than others

no taxes

5. One major advantage of a flat tax over the current tax system would be ______.

Group of answer choices

the ability of tax payers to use more exemptions

higher earners contributing a greater share of taxes

a simplification of the tax filing process

increased employment opportunities for tax accountants

6. Sales (excise) taxes are considered ______ because lower income earners pay a ______ percentage of their income for this type of tax.

progressive; higher

regressive; lower

progressive; lower

regressive; higher

7. Hu earns $120,000 per year. He is charged a 20% tax on the first $80,000 he earns. He is charged a 30% tax for any income he earns between $80,000 and $200,000. If he were to earn an extra $5,000 this year, what would his marginal tax rate be?

30%

10%

23%

20%

8. The percentage of any additional income that people are willing to spend is called:

marginal propensity to consume

average propensity to consume

total propensity to consume

average propensity to save

9. Automatic stabilizers are changes in ______.

discretionary spending

taxes and transfer payments

interest rates and money supply

import levels

10. Fiscal policy is used mainly to ______ the economy.

stabilize

describe

analyze

track

11. Expansionary Fiscal Policy usually leads to what kind of a government budget situation?

trade imbalance

balanced budget

deficit

surplus

12. Contractionary Fiscal Policy may be used to fight ______.

deflation

unemployment

stagnation

inflation