A Key Difference Between Functional Finance and Sound Finance Is

question 117

Multiple Choice

A key difference between functional finance and sound finance is that in the functional finance approach, the government has the potential for:

• A)a more active role in spending and taxing decisions.
• B)a less active role in spending and taxing decisions.
• C)no role since functional finance holds that on moral principle the budget should be balanced.
• D)more active role in spending and taxing but only during depressions.

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Definitions:

FUTA Tax

Federal Unemployment Tax Act tax, an employer-paid tax used to fund state workforce agencies.

Maximum Credit

Refers to the highest amount of credit a taxpayer can claim on their tax return, which directly reduces their tax liability.

Taxable Payments

Payments received that are subject to income tax, including wages, salaries, and interest income.

Taxpayer Identification Number

A unique number assigned to taxpayers for identification purposes by the IRS or Social Security Administration, such as a Social Security Number (SSN) for individuals.