Test Bank For Personal Finance 6th Canadian Edition by Jack Kapoor

03Student: _______________________________________________________________________________________1. The main purpose of taxes is toA. create jobsB. reduce the chances of inflation.C. generate revenue for funding government programs. D. discourage use of certain goods and services.E. decrease competition from foreign companies.2. The use of legitimate methods to reduce one’s taxes is tax ____________.A. evasionB. avoidanceC. exemptionsD. deferred techniques E. reductions3. The ______________ property tax is based on the value of land and buildings.A. personalB. real estate C. directD. proportional E. regressive4. An exemption affects a person’s tax situation by:A. increasing the standard deduction.B. increasing the taxpayer’s marginal tax rate. C. decreasing itemized deductions.D. reducing the taxpayer’s taxable income.E. increasing tax­exempt income.5. Taxable income is used to compute a person’sA. exemptions. B. income tax. C. deductions. D. tax credit. E. exclusions.

6. Which of the following would result in a reduction of taxable income?A. portfolio income B. tax creditsC. union duesD. business income E. earned income7. Money received by an individual for personal effort is ____________ income.A. earned or employment investment B. investmentC. portfolioD. excludedE. capital gains8. Money received in the form of dividends or interest is ____________ income.A. business incomeB. earned or employment C. excludedD. capital gainE. investment9. Earnings from a limited partnership would be an example of ____________ income.A. earnedB. investmentC. portfolioD. net business income E. excluded10. Income that is not subject to income tax includes:

A. B. C. D. E.

the GST/HST rebate.the Canada child tax benefitgifts.lottery winnings.GST/HST rebates, Canada Child Tax benefits, gifts, and lottery winnings are not subject to income tax.