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Government Final May 2010MU

True/False
Indicate whether the sentence or statement is true or false.
 

1. 

Productivity will decrease if workers are unmotivated.
 

2. 

The four important measures of cost are: total cost, fixed cost, variable cost, and marginal cost.
 

3. 

The supply curve is likely to be elastic for products that can be made quickly without huge amounts of capital and skilled labor.
 

4. 

The Law of Supply states that suppliers will normally offer less for sale at higher prices and more for sale at lower prices.
 

5. 

The theory of production deals with the relationship between the factors of production and the output of goods and services.
 

6. 

The Law of Demand states that more of a product will be purchased at low prices than at high ones.
 

7. 

An increase in the cost of inputs can cause the supply curve to shift to the left.
 

8. 

The production possibilities frontier can be reached even if certain resources remain idle.
 

9. 

The profit motive states that the consumer decides WHAT goods and services to produce.
 

10. 

A demand schedule is created from a demand curve.
 

11. 

If the price of an item is too high in a competitive market, a shortage appears until the price goes down.
 

12. 

Capitalism is a competitive economic system in which private citizens own the factors of production.
 

13. 

The paradox of value occurs when some necessities have little value, while some non-necessities have a much higher value.
 

14. 

A nation's wealth refers to a worth that can be expressed in dollars and cents.
 

15. 

When manufactured goods are used to produce other goods and services, they are called capital goods.
 

16. 

Economic products consist of both goods and services that are useful, relatively scarce, and transferable to others.
 

17. 

Marginal cost is the change in total revenue when one more unit of output is sold.
 

18. 

The four factors of production are land, capital, labor, and financing.
 

19. 

In economics, land refers to the natural resources needed for production, such as forests, minerals, and climate.
 

20. 

Voluntary exchange is a characteristic of command economies.
 

21. 

Both goods and services are counted as part of a nation's wealth.
 

22. 

Fixed cost is the cost that a business incurs even if there are no employees and no production takes place.
 

23. 

Division of labor increases efficiency because it allows workers to master many aspects of their jobs.
 

24. 

Marginal utility describes the decreasing satisfaction a consumer receives with the purchase of each additional unit.
 

25. 

The market supply curve shows the quantities offered at various prices by all firms that offer the product for sale in a given market.
 

26. 

Economic interdependence limits a nation's growth and usually reduces the efficiency of production.
 

27. 

A nondurable good lasts for less than five years when used on a regular basis.
 

28. 

The entrepreneur organizes land, capital, and labor for production in hopes of earning a profit.
 

29. 

Economic growth occurs when a nation's total output of goods and services increases over time.
 

30. 

Economics is a social science because it deals with how people behave while trying to satisfy their needs and wants through use of relatively scarce resources.
 

31. 

Time is an opportunity cost when a manufacturer assigns workers to one task rather than to another.
 

32. 

The Law of Variable Proportions states that in the short run, output will not change as one production input is varied while the others remain constant.
 

33. 

Marginal analysis compares the additional benefits of an action to its additional costs.
 

34. 

The production function describes the relationship of changes in output to different amounts of a single input while other inputs are held constant.
 

35. 

A demand curve illustrates the quantity demanded at all possible prices at a given time.
 

36. 

If producers expect lower prices in the future, they may withhold some of the supply.
 

37. 

A desire to buy a product is the only requirement needed for demand to exist.
 

38. 

The circular flow of economic activity describes an economy that is free of markets.
 

39. 

High gas prices during the 1970s discouraged conservation efforts.
 

40. 

The traditional response to pollution problems has been to legislate regulations.
 

41. 

Pollution taxes are designed to give firms the incentive not to pollute.
 

42. 

According to an economist, a resource becomes scarce when it is polluted.
 

43. 

People have become increasingly concerned about pollution in recent years.
 

44. 

The National Council on Economic Education recommends that the first step in economic decision making should be to state the problem or the issue.
 

45. 

Cost-benefit analysis can be used to make choices among economic goals.
 

46. 

Socialism is the dominant economic force in the world today.
 

47. 

Capitalism has remained the same for the past 100 years.
 

48. 

Many economists believe capitalism is the economic system best able to accomodate the unforeseen events of the future.
 

49. 

Supply and demand are used to predict the incidence of a tax.
 

50. 

The three criteria for effective taxes are equity, complexity, and efficiency.
 

51. 

The two principles of taxation are the benefit principle and the ability-to-pay principle.
 

52. 

The marginal tax rate is the tax that applies to the next dollar of taxable income.
 

53. 

A regressive tax imposes a lower percentage rate of taxation on low incomes than on high incomes.
 

54. 

The two largest sources of revenue for states are sales taxes and intergovernmental revenues.
 

55. 

A person's payroll withholding statement summarizes federal, state, and local tax deductions.
 

56. 

Taxes on most personal property are seldom collected because of the problem of valuation.
 

57. 

Only one-quarter of the states run public lotteries to raise revenue.
 

58. 

States receive funds from the federal government to help pay for education, highways, and hospitals.
 

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

59. 

Impeachments are tried
a.
in the House of Representatives with the Governor presiding
c.
in the state capital with the Governor presiding
b.
in the House with the Chief Justice of the Supreme Court presiding
d.
in the Senate with the Chief Justice presiding
 

60. 

There are___state Senators
a.
40
c.
50
b.
30
d.
20
 

61. 

Rent payments and property taxes would be counted as
a.
variable costs.
c.
total cost.
b.
fixed costs.
d.
marginal costs.
 

62. 

All of the following are characteristics of allocation by rationing EXCEPT
a.
efficiency.
c.
diminished incentive for workers.
b.
high administrative cost.
d.
lack of fairness.
 

63. 

The situation in which some necessities have little value while some non-necessities have a much higher value is known as
a.
economic interdependence.
c.
paradox of value.
b.
opportunity cost.
d.
trade-offs.
 

64. 

The term of office for AZ Legislature is
a.
2 years (House and Senate)
c.
2 years (House), 4 years (Senate)
b.
4 years (House), 6 years (Senate)
d.
4 years (House and Senate)
 

65. 

An economy at its production possibilities frontier is operating
a.
without division of labor.
c.
at full potential.
b.
with slow economic growth.
d.
as a free enterprise economy.
 

66. 

Referendum petitions require signatures of at least___of the electors who voted for the Governor in the last election
a.
20%
c.
5%
b.
15%
d.
10%
 

67. 

At a given price, a surplus occurs when
a.
the quantity supplied is less than the quantity demanded.
b.
the quantity supplied is greater than the quantity demanded.
c.
the quantity demanded is more than the quantity supplied.
d.
the quantity demanded is the same as the quantity supplied.
 

68. 

There may be no fewer than___judges on the Arizona Supreme Court
a.
12
c.
5
b.
8
d.
15
 

69. 

A market economy
a.
limits the choices of goods and services available.
b.
offers a high degree of certainty for its workers.
c.
permits extensive government intervention.
d.
does not provide for everyone's basic needs.
 

70. 

The AZ Executive Department consists of
a.
the Governor, State Treasurer, and Attorney General
c.
the Governor only
b.
the Governor, Secretary of State, Attorney General, State Treasurer, and Superintendent of Public Instruction
d.
the Governor, Secretary of State, Assessor, Recorder and Attorney General
 

71. 

When a customer's need for a product is not urgent, demand tends to be
a.
complementary.
c.
elastic.
b.
unit elastic.
d.
inelastic.
 

72. 

A business doubled the price of a product in order to increase profits. Which of the following scenarios might have occurred?
a.
A dramatic decline in revenues demonstrated the elasticity of the product.
b.
A small increase in revenues demonstrated the unit elasticity of the product.
c.
A sharp increase in revenues demonstrated the elasticity of the product.
d.
A dramatic decline in revenues demonstrated the inelasticity of the product.
 

73. 

For most products and services, increased price results in
a.
reduced demand for substitutes.
c.
demand for fewer products.
b.
demand for more products.
d.
increased demand for complements.
 

74. 

A demand schedule shows
a.
a listing of the various quantities demanded of a particular product at all prices that might prevail in the market.
b.
the fluctuations in demand that occurred over a specified period of time.
c.
the fluctuations in demand scheduled to occur over the following year.
d.
an upward-sloping curve that illustrates the positive relationship between price and quantity demanded.
 

75. 

An increase in the price of cameras results in a decrease in the demand for film. The two products are
a.
unrelated.
c.
complements.
b.
demand elastic.
d.
substitutes.
 

76. 

Which group of people ultimately determines the products that a free enterprise economy produces?
a.
local government
c.
Congress
b.
property owners
d.
consumers
 

77. 

Elected county officers include
a.
Sheriff, Accountant, Tax Collector, Public Health Officer and School Committee
c.
Superintendent of Schools, Treasurer, Assessor, Sheriff, and County Attorney
b.
County Manager, Assessor, Attorney General, Sheriff, and Treasurer
d.
County Commissioner, Sheriff, County Attorney, Public Works Director, and Assessor
 

78. 

Actions in one part of the country or world that have an economic impact on what happens elsewhere are examples of
a.
economic interdependence.
c.
specialization.
b.
opportunity costs.
d.
trade-offs.
 

79. 

Elected county officials serve___year terms
a.
6
c.
4
b.
8
d.
2
 

80. 

When employees are getting in each other's way, the firm is operating
a.
in Stage I of production.
c.
as much as it possibly can.
b.
in Stage II of production.
d.
in Stage III of production.
 

81. 

An initiative refers to when
a.
the Legislature repeals a law
c.
the people proposes a new law
b.
the Legislature creates a new law
d.
the people repeal a law
 

82. 

Because a modest price increase has little or no effect, the demand for the product is
a.
complementary.
c.
unit elastic.
b.
inelastic.
d.
elastic.
 

83. 

To recall any elected official, recall petitions must have valid signatures equaling
a.
50% of the number of votes cast in the last general election for that office
c.
40% of the number of votes cast in the last general election for that office
b.
15% of the numbers of votes cast in the last general election for that office
d.
25% of the number of votes cast in the last general election for the office
 

84. 

Initiative petitions require the signature of at least
a.
25% of the qualified electors
c.
10% of the qualified electors
b.
four members of the Executive Department
d.
2/3 of the Legislature
 

85. 

The purpose of government in a command economy is to
a.
encourage entrepreneurs.
b.
promote economic freedom.
c.
ensure the availability of consumer products.
d.
make major economic decisions.
 

86. 

Consumers' willingness to replace a costly item with a less costly item is an example of
a.
complements.
c.
the income effect.
b.
the substitution effect.
d.
demand elasticity.
 

87. 

An increase in the price of milk causes a decrease in the demand for cereal. The two products are
a.
unrelated.
c.
complements.
b.
substitutes.
d.
demand elastic.
 

88. 

Which of the following is NOT considered an economic and social goal?
a.
entrepreneurship
c.
economic efficiency
b.
economic growth
d.
price stability
 

89. 


Article 2 section 2.1 of the AZ Cosntitution protects the rights of
a.
victims
c.
teachers
b.
the governor
d.
the accused
 

90. 

What is this?
“Under this power ten per cent of the qualified electors shall have the right to propose any measure, and fifteen per cent shall have the right to propose any amendment to the constitution.”
a.
statutory initiative
c.
constitutional initiative
b.
right
d.
referendum
 

91. 

Profits will be maximized when marginal revenue
a.
equals marginal cost.
c.
exceeds marginal cost.
b.
is one-half marginal cost.
d.
is double marginal cost.
 

92. 

The money used to buy the tools and equipment needed for production is known as
a.
capital goods.
c.
wealth.
b.
the factors of production.
d.
financial capital.
 

93. 

The separation of powers is described in Article ____ of the AZ Cosntitution
a.
1
c.
3
b.
2
d.
25
 

94. 

What title of the AZ Cosntitution is this?
Official language of Arizona
Section 2. The official language of the state of Arizona is English.
a.
12
c.
28
b.
6
d.
17
 

95. 

In a market economy, a high price is a signal for
a.
producers to supply less and consumers to buy less.
b.
producers to supply less and consumers to buy more.
c.
government to intervene to protect consumers.
d.
producers to supply more and consumers to buy less.
 

96. 

Manufactured goods needed to produce other goods and services are called
a.
capital goods.
c.
nondurable goods.
b.
Gross Domestic Product (GDP).
d.
consumer goods.
 

97. 

Advertising, fashion trends, and new product introductions serve to
a.
increase income effectiveness.
c.
create consumer demand.
b.
minimize the income effect.
d.
create consumer needs.
 

98. 

A municipal corporations
a.
a Governor-approved self-governing city or town with more than 3500 people
c.
a town with 1000 people or less
b.
a Governor-approved self-governing city or town of any size
d.
a state-funded organization designed to provide for larger city or town governments
 

99. 

The theory of production deals with the relationship between the factors of production and
a.
fixed costs.
c.
the cost of raw materials.
b.
the cost of marginal returns.
d.
the output of goods and services.
 

100. 

The study of economics is important because it enables us to
a.
determine what goods ought to be produced.
b.
increase our consumption of consumer goods.
c.
become better decision makers.
d.
describe our standard of living.
 

101. 

Total cost is the sum of the
a.
fixed costs and overhead.
c.
fixed and variable costs.
b.
fixed and marginal costs.
d.
all variable costs.
 

102. 

A popular model used to illustrate the concept of opportunity cost is
a.
entrepreneurship.
c.
the paradox of value.
b.
the factors of production.
d.
the production possibilities frontier.
 

103. 

Division of labor is a characteristic of
a.
assembly line production.
c.
classroom education.
b.
home craft businesses.
d.
entrepreneurship.
 

104. 

To arrive at an economic decision, a decision-making grid may be used to evaluate
a.
alternative choices of action.
c.
only capital goods.
b.
only durable goods.
d.
productivity.
 

105. 

The minimum wage is an example of a federal law that supports
a.
full employment.
c.
economic growth.
b.
economic equity.
d.
economic efficiency.
 

106. 

When a manufacturer of pain medication reduced the price of the medication by 30%, profits declined by almost exactly 30%. Demand for the product is
a.
complementary.
c.
unit elastic.
b.
elastic.
d.
inelastic.
 

107. 

The federal minimum wage law demonstrates
a.
a societal choice for economic equity over efficiency.
b.
the function of equilibrium price in a competitive market.
c.
government intervention to ensure the equilibrium price.
d.
market equilibrium.
 

108. 

An example of a market economy is
a.
the Inuit.
c.
the United States.
b.
North Korea.
d.
the former Soviet Union.
 

109. 

The dollar value of all final goods and services and the most comprehensive measure of a country's total production output is
a.
financial capital.
c.
a cost-benefit analysis.
b.
Gross Domestic Product (GDP).
d.
its standard of living.
 

110. 

All of the following are characteristics of a command economy EXCEPT
a.
it is not designed to meet the wants of consumers.
b.
it provides workers with few incentives to work hard.
c.
public services are available at little or no cost.
d.
it can change direction drastically in a brief period of time.
 

111. 

What does this mean. Article 2 sec 35 of AZ Cosntitution?.
“A person who is present in this state in violation of federal immigration law related to improper entry by an alien shall not be awarded punitive damages in any action in any court in this state.”
a.
damages and illegal
c.
punishment to be illegal
b.
illegals can  not sue if injured
d.
illegals get paid
 

112. 

If the world population continues to grow at its present pace, by 2050 the world's population will reach
a.
20 billion.
c.
eight billion.
b.
12 billion.
d.
six billion.
 

113. 

Nearly two-thirds of the world's known coal reserves are in the United States,
a.
Japan, and China.
c.
Russia, and China.
b.
Russia, and Poland.
d.
Poland, and Canada.
 

114. 

Cost-benefit analysis would be useful in all of the following situations EXCEPT for
a.
firms about to purchase capital goods.
b.
government employees evaluating welfare programs.
c.
local fire departments responding to a three-alarm blaze.
d.
individuals about to purchase a new vehicle.
 

115. 

Under a system of pollution permits, the amount of pollution can be reduced by
a.
issuing fewer permits as time goes on.
b.
issuing more permits as time goes on.
c.
taxing the pollution permits.
d.
giving tax breaks for the pollution permits.
 

116. 

Today the dominant economic force in the world is
a.
socialism.
c.
communism.
b.
capitalism.
d.
military strength.
 

117. 

Malthus's predictions were not entirely accurate for
a.
industrialized nations.
c.
developing nations.
b.
capitalist nations.
d.
much of the African continent.
 

118. 

The largest category of nonrenewable energy in use in the United States is
a.
coal.
c.
petroleum.
b.
natural gas.
d.
hydroelectric power.
 

119. 

The Ogallala Aquifer
a.
may be pumped dry within the next 40 years.
b.
underlies much of Southern California.
c.
is no longer useable due to pollution.
d.
is the largest oil reserve in North America.
 

120. 

Pollution permits
a.
are in the theoretical stage and have not been used.
b.
are just a way to let companies legally pollute at no cost to the companies.
c.
can be made scarce, forcing companies to reduce pollution.
d.
take the place of pollution-control equipment.
 

121. 

All of the following are advantages of the market economy EXCEPT
a.
buyers have all of their wants satisfied.
b.
prices efficiently allocate resources.
c.
supply and demand interact to establish prices.
d.
incremental adjustments lead to gradual changes.
 

122. 

The incidence of a tax can more effectively be shifted from the supplier to the consumer if
a.
the demand curve is inelastic.
b.
the demand curve is elastic.
c.
it is not a luxury tax or an excise tax.
d.
it is a property tax rather than an income tax.
 

123. 

The authority to levy a federal income tax comes from
a.
the Fifth Amendment.
c.
an act of Congress.
b.
the Sixteenth Amendment.
d.
the Bill of Rights.
 

124. 

Intergovernmental revenues are generally intended for
a.
education and public welfare.
c.
environmental cleanup.
b.
public transportation.
d.
parks and recreation.
 

125. 

The alternative minimum tax
a.
is an additional tax above and beyond the base rate.
b.
requires people to pay a minimum tax of 20 percent.
c.
allows a reduction in business taxes based on investment in equipment.
d.
allows larger-than-normal depreciation charges.
 

126. 

The flat tax
a.
would increase the need for individuals to hire tax accountants.
b.
includes incentives that promote positive economic behavior.
c.
allows too many loopholes.
d.
simplifies the tax process.
 

127. 

The “incidence of a tax”
a.
is a benefit tax.
b.
refers to those who bear the final burden of taxation.
c.
is a special tax on individuals with high income.
d.
is a tax paid by self-employed workers.
 

128. 

Ann earns $10,000 annually and pays a tax of $1,000. Jerome earns $60,000 during the same period and pays taxes of $20,000. The tax they both paid was a
a.
proportional tax.
c.
regressive tax.
b.
progressive tax.
d.
marginal tax.
 

129. 

FICA includes taxes to pay for
a.
Social Security and medicare.
c.
unemployment and medicare.
b.
Social Security and unemployment.
d.
medicare and worker's compensation.
 

130. 

The Taxpayer Relief Act of 1997
a.
increased capital gains taxes.
b.
eliminated tax credits for families with children.
c.
changed marginal tax brackets to favor families.
d.
did little to benefit people without children or capital gains.
 

131. 

The flat tax
a.
shifts the burden of taxes to businesses.
b.
would complicate tax filing for most individuals.
c.
departs from ability-to-pay principle of taxation.
d.
is strictly proportional even when some income is exempted.
 

Matching
 
 
Match each statement with the correct item below.
a.
diagram representing various combinations of goods and/or services that an economy can produce when all productive resources are fully employed
b.
any good that lasts three years or more when used regularly
c.
process of using up goods and services to satisfy wants and needs
d.
process of creating goods and services
e.
market where productive resources are bought and sold
f.
economy in which consumers and privately owned businesses make the majority of the WHAT, HOW, and FOR WHOM decisions
g.
basic requirement for survival
h.
manufactured goods that are used to produce other goods
i.
way of expressing a need that leads to a preference for some goods over others
j.
work that is performed for someone
 

132. 

want
 

133. 

production
 

134. 

factor market
 

135. 

production possibilities frontier
 

136. 

capital good
 

137. 

need
 

138. 

free enterprise economy
 

139. 

service
 
 
Match each statement with the correct item below.
a.
study of how people try to satisfy their needs and wants through the use of limited resources
b.
people with all their efforts, abilities, and skills
c.
condition of not having enough resources to produce all the things people want
d.
worth that can be expressed in dollars and cents
e.
item that is economically useful or that satisfies an economic want
f.
alternative choices made by consumers in the marketplace
g.
quality of life based on the possession of the necessities and luxuries that make life easier
h.
sum of those economic products that are tangible, scarce, useful, and transferable
i.
cost of the next best alternative use of money, time, or resources when one choice is made rather than another
j.
tools, equipment, machinery, and factories used in the production of goods and services
 

140. 

opportunity cost
 

141. 

capital
 

142. 

economics
 

143. 

wealth
 

144. 

labor
 

145. 

trade-offs
 

146. 

good
 

147. 

scarcity
 
 
Match each statement with the correct item below.
a.
amount of a product that producers bring to market at any given price
b.
total product a firm must sell to cover its total costs
c.
government payment to encourage or protect an economic activity
d.
period of production that's long enough for adjustments in all resources
e.
amount of a product that would be offered for sale at all possible prices
f.
unprocessed natural products used in production
g.
cost a business incurs even if nothing is produced
h.
graph showing the various quantities supplied at each and every price
i.
number of units sold multiplied by the average price per unit
j.
cost that changes when the rate of operation or output changes
 

148. 

supply
 

149. 

long run
 

150. 

fixed cost
 

151. 

variable cost
 

152. 

total revenue
 

153. 

break-even point
 
 
Match each statement with the correct item below.
a.
measure of responsiveness that shows how a dependent variable responds to a change in an independent variable
b.
field of economics that deals with behavior and decision making by small units
c.
describes change in demand when a change in price causes a relatively larger change in quantity demanded
d.
extra usefulness gained from using one more unit of a product
e.
movement along the demand curve
f.
desire, ability, and willingness to buy a product
g.
products used in place of other products
h.
change in quantity demanded due to a change in relative price
i.
listing that shows quantities demanded of a product at all prices
j.
given change in price that causes a proportional change in quantity demanded
 

154. 

microeconomics
 

155. 

substitution effect
 

156. 

marginal utility
 

157. 

demand schedule
 

158. 

elastic
 

159. 

demand
 

160. 

elasticity
 

161. 

substitutes
 
 
Match each statement with the correct item below.
a.
situation in which suppliers offer different amounts of products for sale at all possible prices
b.
principle that states that in the short run, output will change if only one input is varied
c.
total output produced by a firm
d.
principle that suppliers will normally offer more for sale at high prices and less at lower prices
e.
extra cost incurred when a business produces one additional unit of a product
f.
graph that shows the quantities of a product offered at various prices by all firms that offer the product
g.
period of production that is too short for any adjustments in production except changes in labor
h.
sum of the fixed and variable costs
i.
measure of the way in which quantity supplied responds to changes in price
j.
total fixed cost
 

162. 

marginal cost
 

163. 

supply elasticity
 

164. 

total product
 

165. 

short run
 

166. 

total cost
 

167. 

Law of Supply
 
 
Match each statement with the correct item below.
a.
act of buyers and sellers freely and willingly engaging in market transactions
b.
driving force that encourages people and organizations to improve their material well-being
c.
organized way in which a society provides for the wants and needs of its people
d.
extent to which individuals or organizations are better off at the end of an economic exchange than before the exchange
e.
economic system in which people carry on their economic affairs freely but are subject to some government intervention
f.
privilege that entitles people to own their possessions
g.
market economy in which private citizens own the factors of production
h.
federal program of disability and retirement benefits that covers most working people
i.
economy in which a central authority makes most of the WHAT, HOW, and FOR WHOM decisions
j.
income that does not increase even if prices go up
 

168. 

command economy
 

169. 

profit motive
 

170. 

private property rights
 

171. 

mixed economy
 

172. 

Social Security
 

173. 

profit
 

174. 

voluntary exchange
 

175. 

economic system
 

176. 

capitalism
 
 
Match each statement with the correct item below.
a.
quantity demanded is greater than quantity supplied
b.
prices are relatively stable, and quantity supplied is equal to quantity demanded
c.
check sent to producers that makes up the difference between the actual market price and the target price
d.
monetary value of a product
e.
quantity supplied is greater than quantity demanded at a given price
f.
price that produces neither a surplus nor a shortage
g.
set of assumptions and/or relationships that can be used to help analyze behavior and predict outcomes
h.
ticket that entitles the holder to a certain amount of a product
i.
a socially desirable price determined by factors other than the market
j.
maximum legal price that can be charged for a product
 

177. 

price ceiling
 

178. 

shortage
 

179. 

price
 

180. 

surplus
 

181. 

economic model
 
 
Match each statement with the correct item below.
a.
role of the consumer as ruler of the market
b.
society's way of providing for wants and needs
c.
program that provides retirement and disability benefits for working people
d.
economic system in which the allocation of resources and nearly all other economic activity stems from ritual or habit
e.
struggle among sellers to attract consumers
f.
economy in which people carry on their economic affairs freely but are subject to some government intervention and regulation
g.
economic system in which people and firms act in their own best interests to answer economic questions
h.
economy in which competition is allowed to flourish with a minimum of government interference
i.
degree to which people are better off after completing an economic activity
j.
rise in the general level of prices
 

182. 

market economy
 

183. 

traditional economy
 

184. 

competition
 
 
Match each statement with the correct item below.
a.
illustrates the demand of everyone interested in purchasing a product
b.
quantity demanded of a product varies inversely with its price
c.
study of the economic behavior of individuals and firms
d.
extent to which a change in price causes a change in demand
e.
decline in extra satisfaction from using additional quantities of a product
f.
change in quantity demanded because a price change altered consumer's real income
g.
products where the use of one product increases the use of another
h.
willingness to buy more or less of a product at the same price
i.
graph showing the quantity demanded at every price
j.
describes a given change in price that causes a relatively smaller change in quantity demanded
 

185. 

Law of Demand
 

186. 

demand curve
 

187. 

inelastic
 

188. 

complements
 

189. 

demand elasticity
 

190. 

microeconomics
 
 
Match each statement with the correct item below.
a.
reduction in business taxes based on investment in new plants and equipment
b.
tax on people's earnings
c.
system requiring employers to deduct income taxes from employees' paychecks and send it directly to the government
d.
profits from the sale of an asset held for 12 months
e.
tax that imposes a higher percentage rate of taxation on people with higher incomes than on people with lower incomes
f.
medicare and FICA
g.
tax on tangible and intangible possessions, such as real estate, buildings, furniture, stocks, bonds, and bank accounts
h.
relatively high tax on socially undesirable products, such as tobacco
i.
tax on the manufacture and sale of selected items
j.
upward revision of the tax brackets to compensate for the effects of inflation
 

191. 

payroll withholding system
 

192. 

sin tax
 

193. 

property tax
 

194. 

individual income tax
 

195. 

indexing
 

196. 

investment tax credit
 

197. 

payroll taxes
 

198. 

progressive tax
 

199. 

capital gains
 

200. 

excise tax
 
 
Match each statement with the correct item below.
a.
person who assigns value to property for tax purposes
b.
tax that imposes a higher percentage of taxation on lower incomes than on higher incomes
c.
annual report to the IRS summarizing income, deductions, and taxes withheld by employers
d.
tax levied on property left to an heir when a person dies
e.
exceptions in the tax law that allow some people to avoid paying taxes
f.
additional tax above and beyond the base rate
g.
federal health care program for senior citizens
h.
proportional tax on individual income after an income threshold has been reached
i.
tax paid by corporations on their income
j.
tax in which everyone pays the same percentage regardless of income
 

201. 

tax loophole
 

202. 

medicare
 

203. 

surcharge
 

204. 

proportional tax
 

205. 

corporate income tax
 

206. 

tax assessor
 

207. 

regressive tax
 

208. 

flat tax
 

209. 

tax return
 

210. 

estate tax
 



 
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