From The Collaborative International Dictionary of English v.0.48 [gcide]:
2. Hence: (Fig.) A test for a single factor, which has only two outcomes, positive or negative; specifically: (Politics) the question of whether a candidate for office is for or against a particular position on an issue; -- used, e.g. by voters concerned predominantly with a single issue, to decide whether to vote for or against a candidate; as, many voters take a candidate's position on abortion as their litmus test. [PJC]
From WordNet (r) 3.0 (2006) [wn]:
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Eye and Pyramid BANKING REFORM CHALLENGE