Suppose the Only Revenue Taken in by the Government Is

question 246

Multiple Choice

Suppose the only revenue taken in by the government is in the form of income tax, and the tax rate is 10 percent. If aggregate income is $800 billion, and government outlays are $100 billion then the government budget has

• A) neither a surplus nor a deficit.
• B) a deficit of $80 billion.
• C) a deficit of $20 billion.
• D) a surplus of $20 billion.

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Definitions:

Bystander Apathy

A social phenomenon in which individuals are less likely to help a victim when other people are present, often due to diffusion of responsibility or fear of intervention.

Big Cities

Urban areas that are notably large in size, population, and often significance within a country or region.

Small Communities

Social units with relatively small populations, often characterized by close-knit relationships and shared values.

Corporations

Are legal entities that can enter into contracts and own property. They are taxed at a lower rate than individuals are and their owners are normally not liable for the corporation’s debt or any harm it may cause the public.