Economics Ch. 14 Study Guide

1. Which type of tax takes a larger percentage of income from low-income groups than from high income groups?
2. Which type of tax takes a larger percentage of income from high-income groups than low-income groups?
3. What are the four characteristics of a good tax?
4. What is the “incidence of a tax” and what determines whether or not a producer can shift the burden?
5. What is the major source of federal tax revenue?
6. What is the “withholding” tax, and why does the government use this method?
7. What is FICA, and what two large government programs does it fund?
8. What are “tax incentives”?
9. What’s the difference between “mandatory spending” and “discretionary spending”?
10. Why is it easier for states to balance their budgets than it is for the federal government?

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