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Chapter 16 - Public Finance: Expenditures and Taxes Chapter 16 Public Finance: Expenditures and Taxes Multiple Choice Questions 1. Proprietary income refers to: A. revenue flowing to the government from taxes. B. money borrowed by the government to finance its operations. C. revenue generated by government-run businesses. D. transfer payments from the government to the owners of property resources. 2. Revenues flowing to the government from government-run or government-sponsored businesses, such as public utilities and state lotteries, are known as: A. proprietary income B. transfer payments C. tax revenue D. subsidies 3. The addition of government to the circular-flow model illustrates that government: A. purchases resources in the resource market. B. provides services to businesses and households. C. purchases goods in the product market. D. does all of these. 16-1 Chapter 16 - Public Finance: Expenditures and Taxes 4. Refer to the above diagram, in which solid arrows reflect real flows; broken arrows are monetary flows. Flow (1) might represent: A. corporate income tax payments. B. government provision of highways for truck transportation. C. business property tax payments. D. transfer payments to low-income families. 5. Refer to the above diagram, in which solid arrows reflect real flows; broken arrows are monetary flows. Flow (2) might represent: A. the provision of national defense by government. B. a government subsidy to farmers. C. corporate income tax payments. D. welfare payments to low-income families. 6. Refer to the above diagram, in which solid arrows reflect real flows; broken arrows are monetary flows. Flow (3) might represent: A. government salaries paid to school teachers. B. property tax payments. C. a state university's purchase of computers. D. social security payments to retirees. 7. Refer to the above diagram, in which solid arrows reflect real flows; broken arrows are monetary flows. Flow (4) might represent: A. the services of NASA astrophysicists. B. the purchase of Stealth bombers. C. personal income taxes. D. investment spending by private corporations. 8. Refer to the above diagram, in which solid arrows reflect real flows; broken arrows are monetary flows. Flow (5) might represent: A. personal income tax revenues. B. the provision of public schools by local governments. C. the purchase of laptop computers by the state of Iowa. D. transfer payments to unemployed workers. 16-2 Chapter 16 - Public Finance: Expenditures and Taxes 9. Refer to the above diagram, in which solid arrows reflect real flows; broken arrows are monetary flows. Flow (6) might represent: A. the payment of payroll taxes by households. B. corporate income tax payments.... View Full Document

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