The goal of Medicare is to A. subsidize costs incurred by doctors. B. help the poor and indigent pay their hospital bills. C. prevent poverty in urban cities. D. subsidize medical expenses for the elderly. The main source of government funding is A. taxes. B. borrowing. C. interest earned from holding bonds. D. transfer payments. Suppose the tax rate on the first $10,000 of income is 0 percent; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on income over $60,000. Family X has an income of $55,000. What is the tax liability of Family X? A. $6,600 B. $7,500 C. $16,500 D. $3,400 Assume a family that earns $20,000 pays $2,000 in income taxes, while a family that earns $40,000 pays $3,000 in income taxes. In this situation, the income tax system is A. regressive. B. progressive. C. proportional. D. one of the above but we cannot tell which one without more information. If a tax system is progressive, then A. the marginal tax rate is lower than the average tax rate as income rises. B. the average and the marginal tax rates are equal. C. the average tax rate is constant, but the dollar amount paid in taxes increases as income increases. D. the marginal tax rate is greater than the average tax rate as income rises. Suppose you purchased 100 shares of stock in 2010 for $25 a share and you sell them today for $50 a share. If the capital gains tax is 28 percent, your tax liability is A. $70. B. $700. C. $2500. D. indeterminate without knowing the inflation rate. Local government expenditures depend on which taxes? A. Revenues from licenses and permits B. Capital gains taxes C. Social Security taxes D. Local property, sales, and excise taxes Ad valorem taxation means A. that only the value added by a service provider is taxed. B. a progressive property tax imposed in some states. C. a negative income tax. D. that the tax rate is a percentage of the price paid for a product. A tax levied on the purchase of a specific good or service is A. an excise tax. B. a consumption tax. C. a purchase tax. D. a value tax. In a small country, the adult population equals 500. There are 400 people in the labor force and 300 people are employed. The labor force participation rate equals A. 25 percent. B. 80 percent. C. 60 percent. D. an undetermined amount given the lack of information. Which category of unemployed individuals makes up the greatest share of those who are unemployed? A. New entrants B. Job losers C. Job leavers D. Reentrants To be counted as unemployed in the United States a person has to be A. at least 21 and out of work. B. at least 16 and less than 65 and actively seeking employment. C. out of work and actively seeking employment. D. at least 16, out of work, and actively seeking employment. The natural rate of unemployment when seasonally adjusted includes A. cyclical and structural unemployment but not frictional. B. frictional unemployment only. C. frictional and cyclical unemployment but not structural. D. frictional and structural unemployment but not cyclical. If a person is fired for poor performance but possesses skills required to obtain another job after some searching, this person is considered A. frictionally unemployed. B. a discouraged worker. C. seasonally unemployed. D. structurally unemployed. Assume that the current price of a market basket of goods is $5,000 and the base year price of the same market basket is $4,000. The current price index is A. 200. B. 2500. C. 125. D. 250. Deflation is defined as a situation in which A. the rate of inflation is below 2 percent. B. the average of all prices of goods and services in an economy is falling. C. the Gross Domestic Product (GDP)'s growth rate is less for a given quarter than it was for the prior quarter. D. the value of the dollar is rising relative to other currencies. Most of the problems caused by inflation are caused by the fact that A. the inflation is often unanticipated and therefore comes as a surprise to individuals in the economy. B. there are no ways available for people to protect themselves against inflation. C. inflation causes the purchasing power of the dollar to increase. D. anticipated inflation induces people to protect themselves against inflation. During a recession A. incomes rise and unemployment increases. B. incomes fall and unemployment increases. C. incomes fall and unemployment falls. D. incomes rise and employment decreases