Question 1

Exhibit 16-3 Income for two persons
 
-In Exhibit 16-3,if the income tax system is currently proportional,we know that:

Accepted Answer

A)   Meredith would probably prefer a progressive income tax system while Hillary would probably prefer a regressive income tax system.
B)   Meredith and Hillary would both probably prefer a regressive income tax system.
C)   Meredith and Hillary would both probably prefer a progressive income tax system.
D)   Meredith would probably prefer a regressive income tax system while Hillary would probably prefer a progressive income tax system.
E)   Meredith would probably prefer a progressive income tax system while Hillary would probably prefer a head tax.

Question 2

Jan has an income of $30,000 and pays $4,500 in taxes.When Jan's income rises to $40,000,her tax bill rises to $6,500.What is Jan's marginal tax rate?

Accepted Answer

A)   5 percent.
B)   15 percent.
C)   16.25 percent.
D)   20 percent.

Question 3

The ability-to-pay philosophy of taxation argues for a progressive form of taxation.

Accepted Answer

A) True 
 B)False

Question 4

The benefits-received principle of taxation is most evident in:

Accepted Answer

A)   progressive tax rates.
B)   excise taxes on gasoline.
C)   the personal income tax.
D)   the corporate income tax.

Question 5

Total government spending (federal,state,and local) sums to approximately:

Accepted Answer

A)   10 percent of the U.S. economy.
B)   20 percent of the U.S. economy.
C)   one-third of the U.S. economy.
D)   one-half of the U.S. economy.

Question 6

A tax whose impact varies inversely with the income of the person taxed,and poor people have a higher percentage of their income taxed than rich people,is known as a:

Accepted Answer

A)   regressive tax.
B)   progressive tax.
C)   proportional tax.
D)   flat tax.
E)   tax holiday.

Question 7

The choice of a voter to remain uninformed because the marginal cost of obtaining information is greater than the marginal benefit from obtaining knowledge is called:

Accepted Answer

A)   irrational ignorance.
B)   rational ignorance.
C)   collective interest.
D)   choice.

Question 8

People who often impose cost on the majority in order to benefit certain groups are called:

Accepted Answer

A)   laissez-faire groups.
B)   encounter groups.
C)   fair-interest groups.
D)   special-interest groups.
E)   none of the above.

Question 9

Consider two people,Sandy Smith,who earns $25,000,and Gary Carver,who earns $50,000.If the government has decided to tax everyone's first $25,000 at 20 percent and everyone's second $25,000 at 40 percent,then Gary pays:

Accepted Answer

A)   $10,000 in taxes and Sandy pays $5,000 in taxes.
B)   $10,000 in taxes and Sandy pays $10,000 in taxes.
C)   $15,000 in taxes and Sandy pays $5,000 in taxes.
D)   $15,000 in taxes and Sandy pays $10,000 in taxes.
E)   $17,000 in taxes and Sandy pays $5,000 in taxes.

Question 10

Since the 1950s,total expenditures in the United States nearly tripled to about 60 percent of GDP.

Accepted Answer

A) True 
 B)False

Question 11

Currently,total government expenditures in the United States have totaled about:

Accepted Answer

A)   one-tenth of GDP.
B)   one-fifth of GDP.
C)   one-third of GDP.
D)   one-half of GDP.

Question 12

Which of the following is an example of a progressive tax?

Accepted Answer

A)   The excise tax on cigarettes.
B)   The federal tax on gasoline.
C)   The federal personal income tax.
D)   All of the above.

Question 13

Which of the following statements is false?

Accepted Answer

A)   The largest source of state and local governments tax revenue is sales and excise taxes.
B)   The largest source of federal government tax revenue is individual income taxes.
C)   A sales tax on food is a regressive tax.
D)   A proportional tax is equal to a fixed dollar amount.

Question 14

If a person is taxed $100 on an income of $1,000,taxed $220 on an income of $2,000,and taxed $390 on an income of $3,000,this person is paying a:

Accepted Answer

A)   progressive tax.
B)   poll tax.
C)   regressive tax.
D)   excise tax.
E)   proportional tax.

Question 15

Which of the following can be classified as a regressive tax?

Accepted Answer

A)   Federal corporate income tax.
B)   Federal personal income tax.
C)   Federal gasoline tax.
D)   All of the above.

Question 16

The study of the decision-making process of government is the study of:

Accepted Answer

A)   Keynesian economics.
B)   public choice theory.
C)   rational expectations theory.
D)   social economics.

Question 17

What are the public choice theory arguments against government involvement in the economy?

Accepted Answer

Public choice theory emphasizes the poss...

Question 18

Which of the following can be classified as a regressive tax?

Accepted Answer

A)   Excise tax.
B)   Sales tax.
C)   Gasoline tax.
D)   All of the above.

Question 19

Which of the following statements is true?

Accepted Answer

A)   The most important source of revenue to the federal government is personal income taxes.
B)   The most important source of revenue to state governments are sales and property taxes.
C)   The most important source of revenue to local governments are local property taxes.
D)   The taxation burden, measured by taxes as a percentage of GDP, is lighter in the United States than in most other advanced industrial countries.
E)   All of the above.

Question 20

Suppose fairness is defined as those who receive the greatest benefits from government should pay the most in taxes,then which of the following taxation systems would be consistent with this notion of fairness?

Accepted Answer

A)   User fees for national parks.
B)   Gasoline taxes to fund highway maintenance.
C)   A tax on the poor to finance food stamps and other low-income assistance programs.
D)   All of the above are consistent.

Exam 16: The Public Sector

What are the public choice theory arguments against government involvement in the economy?

Correct AnswerverifiedPublic choice theory emphasizes the poss...View AnswerShow Answer

Which of the following statements is true?

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Which of the following can be classified as a regressive tax?

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Which of the following statements is false?

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People who often impose cost on the majority in order to benefit certain groups are called:

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The choice of a voter to remain uninformed because the marginal cost of obtaining information is greater than the marginal benefit from obtaining knowledge is called:

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Total government spending (federal,state,and local) sums to approximately:

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Exhibit 16-3 Income for two persons -In Exhibit 16-3,if the income tax system is currently proportional,we know that:

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Which of the following can be classified as a regressive tax?

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A tax whose impact varies inversely with the income of the person taxed,and poor people have a higher percentage of their income taxed than rich people,is known as a:

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Jan has an income of $30,000 and pays $4,500 in taxes.When Jan's income rises to $40,000,her tax bill rises to $6,500.What is Jan's marginal tax rate?

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The study of the decision-making process of government is the study of:

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The benefits-received principle of taxation is most evident in:

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Which of the following is an example of a progressive tax?

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Currently,total government expenditures in the United States have totaled about:

Correct AnswerverifiedShow Answer

Since the 1950s,total expenditures in the United States nearly tripled to about 60 percent of GDP.

Correct AnswerverifiedShow Answer

Suppose fairness is defined as those who receive the greatest benefits from government should pay the most in taxes,then which of the following taxation systems would be consistent with this notion of fairness?

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Consider two people,Sandy Smith,who earns $25,000,and Gary Carver,who earns $50,000.If the government has decided to tax everyone's first $25,000 at 20 percent and everyone's second $25,000 at 40 percent,then Gary pays:

Correct AnswerverifiedShow Answer

If a person is taxed $100 on an income of $1,000,taxed $220 on an income of $2,000,and taxed $390 on an income of $3,000,this person is paying a:

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The ability-to-pay philosophy of taxation argues for a progressive form of taxation.

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Public choice theory emphasizes the poss...
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