Question 1

When a merchant charges an extra 5 percent of a good's purchase price to be paid to the government, this is an example of a(n)

Accepted Answer

A) income tax. 
B) proportional tax. 
C) property tax. 
D) tariff. 
E) excise tax. 
A) income tax. 
B) proportional tax. 
C) property tax. 
D) tariff. 
E) excise tax.

Question 2

Tax incidence is how much

Accepted Answer

A) the government receives from taxpayers. 
B) buyers and sellers actually bear the burden of a tax. 
C) taxpayers evade taxes illegally. 
D) the government spends using tax revenues. 
E) businesses get in tax credits from the government. 
A) the government receives from taxpayers. 
B) buyers and sellers actually bear the burden of a tax. 
C) taxpayers evade taxes illegally. 
D) the government spends using tax revenues. 
E) businesses get in tax credits from the government.

Question 3

Above ____ in income, the earned income tax credit effectively adds ____ percent to the marginal tax rate.

Accepted Answer

A) $10,000; 21 
B) $10,000; 15 
C) $13,100; 15 
D) $13,100; 21 
E) $50,000; 15 
A) $10,000; 21 
B) $10,000; 15 
C) $13,100; 15 
D) $13,100; 21 
E) $50,000; 15

Question 4

Refer to the figure below. Which of the following statements is true?
A)A per-unit tax will result in the greatest reduction of output in the market illustrated in Figure B.
B)No deadweight loss from a per-unit tax will result in either of the markets illustrated.
C)A per-unit tax will result in the greatest deadweight loss in the market illustrated in Figure A.
D)A per-unit tax will result in the greatest loss of consumer surplus in the market illustrated in Figure A.
E)A per-unit tax will result in the smallest price change in the market illustrated in Figure A.

Accepted Answer

@#IMG-DLM& a.A per-unit tax will result in the gre

Question 5

Given the data in the table below, draw the Lorenz curve before and after an income tax. Is this tax progressive or regressive?

Accepted Answer

This tax i

Question 6

The smaller the Gini coefficient, the

Accepted Answer

A) larger the degree of income equality. 
B) larger the degree of income inequality. 
C) larger the national income relative to population. 
D) smaller the national income relative to population. 
E) larger the size of the government. 
A) larger the degree of income equality. 
B) larger the degree of income inequality. 
C) larger the national income relative to population. 
D) smaller the national income relative to population. 
E) larger the size of the government.

Question 7

All other things being equal, which of the following results in the most tax burden for consumers in the case of a per-unit tax on a good?

Accepted Answer

A) Perfectly elastic supply 
B) Relatively elastic supply 
C) Unit-elastic supply 
D) Relatively inelastic supply 
E) Perfectly inelastic supply 
A) Perfectly elastic supply 
B) Relatively elastic supply 
C) Unit-elastic supply 
D) Relatively inelastic supply 
E) Perfectly inelastic supply

Question 8

Exhibit 14-2  
-Refer to Exhibit 14-2. To give workers incentives to work more, the government should

Accepted Answer

A) increase the tax rate if it is between 50 percent and 100 percent. 
B) decrease the tax rate if it is between 50 percent and 100 percent. 
C) decrease the tax rate if it is between 0 percent and 50 percent. 
D) either increase or decrease the tax rate to produce the same result. 
E) do nothing. 
A) increase the tax rate if it is between 50 percent and 100 percent. 
B) decrease the tax rate if it is between 50 percent and 100 percent. 
C) decrease the tax rate if it is between 0 percent and 50 percent. 
D) either increase or decrease the tax rate to produce the same result. 
E) do nothing.

Question 9

A flat tax system that does not allow for deductions or exemptions is a

Accepted Answer

A) marginal tax. 
B) constant tax. 
C) progressive tax. 
D) regressive tax. 
E) proportional tax. 
A) marginal tax. 
B) constant tax. 
C) progressive tax. 
D) regressive tax. 
E) proportional tax.

Question 10

A family of four with a total income of $60,000 has a better standard of living than a family of two making $35,000.

Accepted Answer

A) True 
 B)False

Question 11

An excise tax levied on all goods and services imported into a country is called a(n)

Accepted Answer

A) buyer tax. 
B) incoming levy. 
C) import tax. 
D) sales tax. 
E) tariff. 
A) buyer tax. 
B) incoming levy. 
C) import tax. 
D) sales tax. 
E) tariff.

Question 12

Exhibit 14-1  
-Refer to Exhibit 14-1. The tax system is considered to be

Accepted Answer

A) progressive. 
B) regressive. 
C) egalitarian. 
D) proportional. 
E) flat. 
A) progressive. 
B) regressive. 
C) egalitarian. 
D) proportional. 
E) flat.

Question 13

How much of the total payroll tax does a U.S. employee pay directly?

Accepted Answer

A) Half of it 
B) Most of it 
C) None of it 
D) 25 percent of it 
E) All of it 
A) Half of it 
B) Most of it 
C) None of it 
D) 25 percent of it 
E) All of it

Question 14

Exhibit 14-2  
-The employee pays the greatest amount of the payroll tax when

Accepted Answer

A) labor supply is relatively inelastic. 
B) labor demand is inelastic. 
C) the employee and employer each write a check to the government for half of the tax. 
D) the employee writes the check to the government. 
E) the employer writes the check to the government. 
A) labor supply is relatively inelastic. 
B) labor demand is inelastic. 
C) the employee and employer each write a check to the government for half of the tax. 
D) the employee writes the check to the government. 
E) the employer writes the check to the government.

Question 15

A social safety net aims at helping corporations employ the poor.

Accepted Answer

A) True 
 B)False

Question 16

A social insurance program is one that guarantees a class of individual payments regardless of income.

Accepted Answer

A) True 
 B)False

Question 17

In terms of income, the lowest 20 percent of families earn less than 5 percent of the nation's income.

Accepted Answer

A) True 
 B)False

Question 18

Employees contribute to most of the payroll taxes.

Accepted Answer

A) True 
 B)False

Question 19

In a progressive tax system, the tax rate increases as income increases.

Accepted Answer

A) True 
 B)False

Question 20

The earned income tax credit can be taken advantage of only by people who work.

Accepted Answer

A) True 
 B)False

Exam 14: Taxes, Transfers, and Income Distribution

When a merchant charges an extra 5 percent of a good's purchase price to be paid to the government, this is an example of a(n)

Tax incidence is how much

Above ____ in income, the earned income tax credit effectively adds ____ percent to the marginal tax rate.

Given the data in the table below, draw the Lorenz curve before and after an income tax. Is this tax progressive or regressive?

The smaller the Gini coefficient, the

All other things being equal, which of the following results in the most tax burden for consumers in the case of a per-unit tax on a good?

Exhibit 14-2 -Refer to Exhibit 14-2. To give workers incentives to work more, the government should

A flat tax system that does not allow for deductions or exemptions is a

A family of four with a total income of $60,000 has a better standard of living than a family of two making $35,000.

An excise tax levied on all goods and services imported into a country is called a(n)

Exhibit 14-1 -Refer to Exhibit 14-1. The tax system is considered to be

How much of the total payroll tax does a U.S. employee pay directly?

Exhibit 14-2 -The employee pays the greatest amount of the payroll tax when

A social safety net aims at helping corporations employ the poor.

A social insurance program is one that guarantees a class of individual payments regardless of income.

In terms of income, the lowest 20 percent of families earn less than 5 percent of the nation's income.

Employees contribute to most of the payroll taxes.

In a progressive tax system, the tax rate increases as income increases.

The earned income tax credit can be taken advantage of only by people who work.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

Filters

Above in income, the earned income tax credit effectively adds percent to the marginal tax rate.