Municipal Bonds Can Be Either General Obligation Bonds or Revenue

question 43

Multiple Choice

Municipal bonds can be either general obligation bonds or revenue bonds.Of these two types of municipal bonds, only general obligation bonds

• A)are specifically serviced by the income generated from particular projects.
• B)are backed by the full faith and credit of the issuer.
• C)repay the principal only if a sufficient level of revenue is generated.
• D)have the principal and interest guaranteed by a third party.

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Definitions:

Regressive Income Tax

A tax system where the tax rate decreases as the taxpayer's income increases, placing a higher relative burden on lower-income earners.

Laffer Curve

A theoretical representation of the relationship between government revenue raised by taxation and the rate of taxation, suggesting an optimal tax rate for maximizing revenue.

Progressive Income Tax

A tax system where the tax rate increases as the taxable amount increases, meaning higher income earners pay a larger percentage of their income in taxes compared to lower income earners.

Progressive Income Tax

A tax system where the tax rate increases as the taxable amount increases, placing a higher financial burden on wealthier individuals.