In the Federal System, the 50 State Governments Retain Sovereignty

question 110

Multiple Choice

In the federal system, the 50 state governments retain sovereignty, which prevents the federal government from interfering in the financial matters of states. However, state governments can become involved in the fiscal matters of local governments, which is evident in recent state takeovers of the city finances of Harrisburg, Pennsylvania, and Flint, Michigan. Why can state governments interfere in the fiscal matters of local governments when the federal government cannot do so with state governments?

• A)The Constitution was amended to increase the power of states over local matters.
• B)The Constitution explicitly gives states the right to intervene in local affairs.
• C)Local governments are not recognized by the U.S. Constitution.
• D)Congress passed a law allowing the states to intervene in local affairs.

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Definitions:

Fixed Costs

Costs that do not change with the level of production or sales volume, such as rent, salaries, and insurance.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as materials and direct labor.

Cost Volume Profit Graph

A graphical representation that displays the relationships between a company's costs, revenues, and profits over different levels of production and sales volumes.

CVP Graph

A visual representation of the Cost-Volume-Profit analysis, illustrating the relationships between an organization's costs, sales volume, and profit.