Question 1

Which of the following is an exhaustive governmental outlay?

Accepted Answer

A)   A federal $5,000 subsidy check to an Illinois farmer
B)   A Temporary Assistance to Needy Families payment made by the State of New York
C)   A NASA payment to Boeing Corporation for space hardware
D)   A federal old age insurance payment to a retired coal miner

Question 2

A progressive tax takes relatively more from the rich than it does from the poor.

Accepted Answer

A) True 
 B)False

Question 3

The tax represented above is:

Accepted Answer

A)   optimal.
B)   proportional.
C)   regressive.
D)   progressive.

Question 4

The efficiency loss of a tax is the tax revenue collected by government minus the value of the public goods financed through the tax.

Accepted Answer

A) True 
 B)False

Question 5

The main difference between sales and excise taxes is that:

Accepted Answer

A)   sales taxes apply to a wide range of products,while excise taxes apply only to a select group of products.
B)   excise taxes apply to a wide range of products,while sales taxes apply only to a select list of products.
C)   sales taxes are consumption taxes,while excise taxes are not.
D)   excise taxes are consumption taxes,while sales taxes are not.

Question 6

Which of the following statements is most consistent with the benefits-received principle of taxation?

Accepted Answer

A)   A childless couple should not be required to pay taxes for the support of public schools.
B)   Prosperous corporations should pay substantial taxes even if they use few government goods and services.
C)   The best tax is the income tax.
D)   People with high incomes should pay more taxes than people with low incomes.

Question 7

The equations for the demand and supply curves for a particular product are P = 10 - .4Q and P = 2 + .4Q,where P is price and Q is quantity expressed in units of 100.After an excise tax is imposed on the product,the supply equation is P = 3 + .4Q.The equilibrium quantity before the excise tax is imposed is:

Accepted Answer

A)   800 units.
B)   1000 units.
C)   1200 units.
D)   1400 units.

Question 8

The incidence of a tax pertains to:

Accepted Answer

A)   the degree to which it alters the distribution of income.
B)   how easy it is to evade the tax.
C)   who actually bears the burden of a tax.
D)   the progressiveness or regressiveness of tax rates.

Question 9

If each taxpayer paid the same lump-sum amount regardless of income level,the tax system would be:

Accepted Answer

A)   disproportionate.
B)   progressive.
C)   proportional.
D)   regressive.

Question 10

(Applying the Analysis) Which of the following claims is not made by defenders of lotteries?

Accepted Answer

A)   Lotteries are a relatively painless way to fund important government services.
B)   Lotteries help reduce organized crime by providing an alternative to illegal gambling.
C)   Lotteries are preferable to taxes because they are voluntary.
D)   Lotteries are progressive in nature,with higher income families playing more frequently.

Question 11

The greater the elasticity of demand and supply,the greater is the efficiency loss of a tax.

Accepted Answer

A) True 
 B)False

Question 12

Given demand,the more inelastic the supply of a product,the larger the portion of an excise tax that is borne by producers.

Accepted Answer

A) True 
 B)False

Question 13

An income tax is progressive if the:

Accepted Answer

A)   absolute amount paid as taxes varies directly with income.
B)   percentage of income paid as taxes is the same regardless of the size of income.
C)   percentage of income paid as taxes increases as income increases.
D)   tax rate varies inversely with income.

Question 14

In 2007,the 20 percent of families with the lowest incomes paid an average federal tax rate (on all federal taxes) of about ___,whereas the 20 percent of families with the highest incomes paid an average tax rate of about ___.

Accepted Answer

A)   5.5 percent;50 percent
B)   10.3 percent;30.9 percent
C)   8.4 percent;27.5 percent
D)   4.0 percent;25.1 percent

Question 15

Federal employment in the United States is dominated by what two functions?

Accepted Answer

A)   National defense and Postal Service
B)   Health care and police
C)   Postal Service and education
D)   Health care and national defense

Question 16

Refer to the above graph.Which of the lines in the above diagram represent(s) a progressive tax?

Accepted Answer

A)   Both A and B
B)   D only
C)   C only
D)   B only

Question 17

Answer the next question on the basis of the following five schedules,all of which represent income tax schedules for an economy.All figures are in billions of dollars.  Which of the above schedules represent(s) a regressive tax?

Accepted Answer

A)   V only
B)   III and V
C)   IV only
D)   I only

Question 18

Using income as the tax base,which of the following best illustrates a regressive tax?

Accepted Answer

A)   The federal inheritance tax
B)   A 7 percent general sales tax
C)   The corporate income tax
D)   The personal income tax

Question 19

Refer to the above data.If your taxable income is $4000,your average tax rate will be:

Accepted Answer

A)   20 percent.
B)   15 percent.
C)   10 percent.
D)   5 percent.At $4000 of taxable income your average tax rate is 15 percent (i.e. ,$600 tax paid/$4000 income) .

Question 20

Refer to the above graph.Which of the lines in the above diagram represent(s) a regressive tax?

Accepted Answer

A)   Both A and B
B)   D only
C)   C only
D)   B only

Exam 12: Public Finance: Expenditures and Taxes

Given demand,the more inelastic the supply of a product,the larger the portion of an excise tax that is borne by producers.

Correct Answer
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Refer to the above data.If your taxable income is $4000,your average tax rate will be:

Correct Answer
verified

The greater the elasticity of demand and supply,the greater is the efficiency loss of a tax.

Correct Answer
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Answer the next question on the basis of the following five schedules,all of which represent income tax schedules for an economy.All figures are in billions of dollars. Which of the above schedules represent(s) a regressive tax?

Correct Answer
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Refer to the above graph.Which of the lines in the above diagram represent(s) a regressive tax?

Correct Answer
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In 2007,the 20 percent of families with the lowest incomes paid an average federal tax rate (on all federal taxes) of about _,whereas the 20 percent of families with the highest incomes paid an average tax rate of about _.

Correct Answer
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Correct Answer
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The efficiency loss of a tax is the tax revenue collected by government minus the value of the public goods financed through the tax.

Correct Answer
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The tax represented above is:

Correct Answer
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Federal employment in the United States is dominated by what two functions?

Correct Answer
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The main difference between sales and excise taxes is that:

Correct Answer
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Using income as the tax base,which of the following best illustrates a regressive tax?

Correct Answer
verified

Refer to the above graph.Which of the lines in the above diagram represent(s) a progressive tax?

Correct Answer
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The incidence of a tax pertains to:

Correct Answer
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Which of the following is an exhaustive governmental outlay?

Correct Answer
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An income tax is progressive if the:

Correct Answer
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Which of the following statements is most consistent with the benefits-received principle of taxation?

Correct Answer
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If each taxpayer paid the same lump-sum amount regardless of income level,the tax system would be:

Correct Answer
verified

A progressive tax takes relatively more from the rich than it does from the poor.

Correct Answer
verified

(Applying the Analysis) Which of the following claims is not made by defenders of lotteries?

Correct Answer
verified

Exam 12: Public Finance: Expenditures and Taxes

Given demand,the more inelastic the supply of a product,the larger the portion of an excise tax that is borne by producers.

Correct AnswerverifiedShow Answer

Refer to the above data.If your taxable income is $4000,your average tax rate will be:

Correct AnswerverifiedShow Answer

The greater the elasticity of demand and supply,the greater is the efficiency loss of a tax.

Correct AnswerverifiedShow Answer

Answer the next question on the basis of the following five schedules,all of which represent income tax schedules for an economy.All figures are in billions of dollars. Which of the above schedules represent(s) a regressive tax?

Correct AnswerverifiedShow Answer

Refer to the above graph.Which of the lines in the above diagram represent(s) a regressive tax?

Correct AnswerverifiedShow Answer

In 2007,the 20 percent of families with the lowest incomes paid an average federal tax rate (on all federal taxes) of about ___,whereas the 20 percent of families with the highest incomes paid an average tax rate of about ___.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The efficiency loss of a tax is the tax revenue collected by government minus the value of the public goods financed through the tax.

Correct AnswerverifiedShow Answer

The tax represented above is:

Correct AnswerverifiedShow Answer

Federal employment in the United States is dominated by what two functions?

Correct AnswerverifiedShow Answer

The main difference between sales and excise taxes is that:

Correct AnswerverifiedShow Answer

Using income as the tax base,which of the following best illustrates a regressive tax?

Correct AnswerverifiedShow Answer

Refer to the above graph.Which of the lines in the above diagram represent(s) a progressive tax?

Correct AnswerverifiedShow Answer

The incidence of a tax pertains to:

Correct AnswerverifiedShow Answer

Which of the following is an exhaustive governmental outlay?

Correct AnswerverifiedShow Answer

An income tax is progressive if the:

Correct AnswerverifiedShow Answer

Which of the following statements is most consistent with the benefits-received principle of taxation?

Correct AnswerverifiedShow Answer

If each taxpayer paid the same lump-sum amount regardless of income level,the tax system would be:

Correct AnswerverifiedShow Answer

A progressive tax takes relatively more from the rich than it does from the poor.

Correct AnswerverifiedShow Answer

(Applying the Analysis) Which of the following claims is not made by defenders of lotteries?

Correct AnswerverifiedShow Answer

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In 2007,the 20 percent of families with the lowest incomes paid an average federal tax rate (on all federal taxes) of about _,whereas the 20 percent of families with the highest incomes paid an average tax rate of about _.

Correct Answer
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