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Government Spending and Income Distribution

Description: This quiz is designed to assess your understanding of the relationship between government spending and income distribution.
Number of Questions: 15
Created by:
Tags: government spending income distribution economics
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Which of the following is NOT a type of government spending?

  1. Transfer payments

  2. Public goods

  3. Government investment

  4. Taxation


Correct Option: D
Explanation:

Taxation is a way for the government to raise revenue, not a type of government spending.

What is the primary goal of transfer payments?

  1. To reduce income inequality

  2. To promote economic growth

  3. To stabilize the economy

  4. To fund public goods


Correct Option: A
Explanation:

Transfer payments are government payments to individuals or households, such as social security, unemployment benefits, and welfare payments. These payments are intended to reduce income inequality by providing financial assistance to those in need.

Which of the following is NOT a type of public good?

  1. National defense

  2. Public parks

  3. Public education

  4. Private goods


Correct Option: D
Explanation:

Private goods are goods that are rivalrous and excludable, meaning that they can be consumed by one person at a time and that people can be prevented from consuming them. Public goods are non-rivalrous and non-excludable, meaning that they can be consumed by many people at the same time and that people cannot be prevented from consuming them.

What is the main purpose of government investment?

  1. To create jobs

  2. To improve infrastructure

  3. To promote economic growth

  4. To reduce income inequality


Correct Option: C
Explanation:

Government investment is spending on projects that are intended to increase the productive capacity of the economy, such as infrastructure projects, research and development, and education. This spending is intended to promote economic growth by increasing the stock of capital and human capital in the economy.

Which of the following is NOT a type of tax?

  1. Income tax

  2. Sales tax

  3. Property tax

  4. Tariffs


Correct Option: D
Explanation:

Tariffs are a type of trade restriction, not a type of tax. Taxes are compulsory payments to the government that are not directly related to the purchase of a good or service.

What is the primary goal of progressive taxation?

  1. To reduce income inequality

  2. To promote economic growth

  3. To stabilize the economy

  4. To fund public goods


Correct Option: A
Explanation:

Progressive taxation is a system of taxation in which the tax rate increases as the taxable income increases. This system is intended to reduce income inequality by placing a greater burden on those with higher incomes.

Which of the following is NOT a type of regressive taxation?

  1. Sales tax

  2. Property tax

  3. Income tax

  4. Excise tax


Correct Option: C
Explanation:

Income tax is a progressive tax, not a regressive tax. Regressive taxes are taxes in which the tax rate decreases as the taxable income increases. This system is intended to place a greater burden on those with lower incomes.

What is the main purpose of automatic stabilizers?

  1. To reduce income inequality

  2. To promote economic growth

  3. To stabilize the economy

  4. To fund public goods


Correct Option: C
Explanation:

Automatic stabilizers are government programs that are designed to automatically respond to changes in the economy. These programs are intended to stabilize the economy by providing support to those who are most affected by economic downturns.

Which of the following is NOT a type of automatic stabilizer?

  1. Unemployment insurance

  2. Food stamps

  3. Social security

  4. Tariffs


Correct Option: D
Explanation:

Tariffs are a type of trade restriction, not a type of automatic stabilizer. Automatic stabilizers are government programs that are designed to automatically respond to changes in the economy.

What is the main purpose of government borrowing?

  1. To reduce income inequality

  2. To promote economic growth

  3. To stabilize the economy

  4. To fund public goods


Correct Option: D
Explanation:

Government borrowing is a way for the government to raise revenue to fund public goods and services. This borrowing can be used to finance government investment, transfer payments, and other government spending.

Which of the following is NOT a type of government debt?

  1. Treasury bonds

  2. Municipal bonds

  3. Corporate bonds

  4. Bills


Correct Option: C
Explanation:

Corporate bonds are issued by corporations, not by governments. Government debt is debt that is owed by the government to its creditors.

What is the main purpose of the national debt?

  1. To reduce income inequality

  2. To promote economic growth

  3. To stabilize the economy

  4. To fund public goods


Correct Option: D
Explanation:

The national debt is the total amount of money that the government owes to its creditors. This debt is used to finance government spending on public goods and services.

Which of the following is NOT a type of government spending multiplier?

  1. Government investment multiplier

  2. Transfer payments multiplier

  3. Tax multiplier

  4. Consumption multiplier


Correct Option: D
Explanation:

The consumption multiplier is a multiplier that is used to estimate the impact of changes in consumer spending on the economy. It is not a type of government spending multiplier.

What is the main purpose of the government budget?

  1. To reduce income inequality

  2. To promote economic growth

  3. To stabilize the economy

  4. To fund public goods


Correct Option: D
Explanation:

The government budget is a plan for how the government will spend its revenue. This budget is used to fund public goods and services, such as education, healthcare, and infrastructure.

Which of the following is NOT a type of government budget deficit?

  1. Structural deficit

  2. Cyclical deficit

  3. Primary deficit

  4. Balanced budget


Correct Option: D
Explanation:

A balanced budget is a budget in which the government's revenue is equal to its spending. A budget deficit is a budget in which the government's spending exceeds its revenue.

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