Internal Revenue Service United States Department of the Treasury

Theme 4: What Is Taxed and WhyLesson 2: Taxes in a Market Economy

 

Part 1

Match the clues below to their correct answers by choosing from the drop-down menu. Continue to Part 2 or, to assess your answers, click the Check My Answers button at the bottom of the page.

  • Correct.
  • Correct.
  • Correct.
  • Correct.
  • Correct.
Part 2

Use the circular flow model shown below to answer the given questions. Type your answers in the space provided. Continue to Part 3 or, to assess your answers, click the Check My Answers button at the bottom of the page.


This model illustrates the circular flow of the economy. Households provide labor/payments to business and taxes/labor to the government. Business provides taxes/goods and services to the government and income/goods and services to households. The government provides services/income to households and services/payments to business.

  1. What do businesses provide households?
  • A. Correct.
  • B.
  • C.
  • D.
  1. What do households provide businesses?
  • A.
  • B. Correct.
  • C.
  • D.
  1. What do businesses receive from the government
  • A.
  • B.
  • C. Correct.
  • D.
  1. What do businesses provide government?
  • A.
  • B.
  • C.
  • D. Correct.
Part 3

Answer the following multiple-choice questions by clicking on the correct answer. To assess your answers, click the Check My Answers button at the bottom of the page.

  1. Which sector earns income and purchases goods and services?
  • A.
  • B.
  • C. Correct.
  1. Which sector provides services and collects taxes?
  • A.
  • B. Correct.
  • C.
  1. Which sector collects taxes and uses labor?
  • A.
  • B. Correct.
  • C.
  1. Which sector supplies labor and makes payments?
  • A.
  • B.
  • C. Correct.
  1. Which sector pays taxes and provides goods and services?
  • A. Correct.
  • B.
  • C.

 

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Incorrect 0
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