Question 1

One determinant of the official poverty-line income is the cost of

Accepted Answer

A) public utilities. 
B) health care. 
C) transportation. 
D) shelter. 
E) food. 
A) public utilities. 
B) health care. 
C) transportation. 
D) shelter. 
E) food.

Question 2

In the United States, the top quintile of families earn about ____ percent of the income.

Accepted Answer

A) 5 
B) 10 
C) 20 
D) 50 
E) 80 
A) 5 
B) 10 
C) 20 
D) 50 
E) 80

Question 3

Exhibit 14-5  
-Refer to Exhibit 14-5. We can say that the poorest 20 percent of Urbanal's population receives

Accepted Answer

A) as much total income as 20 percent of Rural's population. 
B) 20 percent of Urbanal's total income. 
C) as much total income as 60 percent of Rural's population. 
D) 5 percent of Urbanal's total income. 
E) 15 percent of Urbanal's total income. 
A) as much total income as 20 percent of Rural's population. 
B) 20 percent of Urbanal's total income. 
C) as much total income as 60 percent of Rural's population. 
D) 5 percent of Urbanal's total income. 
E) 15 percent of Urbanal's total income.

Question 4

The ability-to-pay principle is the idea that only those who have very high incomes should pay any taxes at all.

Accepted Answer

A) True 
 B)False

Question 5

In a progressive tax system, anyone earning a positive amount of income must pay some income tax.

Accepted Answer

A) True 
 B)False

Question 6

Tax incidence refers to who bears the tax burden.

Accepted Answer

A) True 
 B)False

Question 7

A tax bracket is a(n)

Accepted Answer

A) figurative term used to describe punishments for failure to pay taxes. 
B) illegal scheme to avoid income taxes. 
C) range of income to which a particular tax rate applies. 
D) range of taxes that different individuals with the same incomes might pay. 
E) list of things taxpayers can do to reduce their taxes. 
A) figurative term used to describe punishments for failure to pay taxes. 
B) illegal scheme to avoid income taxes. 
C) range of income to which a particular tax rate applies. 
D) range of taxes that different individuals with the same incomes might pay. 
E) list of things taxpayers can do to reduce their taxes.

Question 8

The table below gives hours worked per month and welfare payments received.

Accepted Answer

The answer of The table below gives hours worked per...

Question 9

In looking at the distribution of income provided by quintile statistics and the Lorenz curve, it must be kept in mind that

Accepted Answer

A) all individuals with high incomes have a lot of wealth, whereas all individuals with low incomes have very little wealth. 
B) those who are poor generally stay poor, and those who are rich generally stay rich. 
C) there has been no change in the distribution of income in the United States over the past 20 years. 
D) when families split up, the two new families formed move into lower quintiles in terms of income. 
E) income per person is being measured. 
A) all individuals with high incomes have a lot of wealth, whereas all individuals with low incomes have very little wealth. 
B) those who are poor generally stay poor, and those who are rich generally stay rich. 
C) there has been no change in the distribution of income in the United States over the past 20 years. 
D) when families split up, the two new families formed move into lower quintiles in terms of income. 
E) income per person is being measured.

Question 10

If the demand for a good is very price-elastic, then the imposition of a per-unit tax on that good will cause

Accepted Answer

A) the buyers to bear a larger portion of the tax burden. 
B) the sellers to bear a larger portion of the tax burden. 
C) no one to bear any tax burden. 
D) the buyers and sellers to bear the tax burden evenly. 
E) no effect on the market for that good. 
A) the buyers to bear a larger portion of the tax burden. 
B) the sellers to bear a larger portion of the tax burden. 
C) no one to bear any tax burden. 
D) the buyers and sellers to bear the tax burden evenly. 
E) no effect on the market for that good.

Question 11

Exhibit 14-1  
-Refer to Exhibit 14-1. An individual making $75,000 pays an average tax rate of

Accepted Answer

A) 40 percent. 
B) 15 percent. 
C) 27 percent. 
D) 35 percent. 
E) 30 percent. 
A) 40 percent. 
B) 15 percent. 
C) 27 percent. 
D) 35 percent. 
E) 30 percent.

Question 12

An efficient tax system should include all the following except

Accepted Answer

A) minimum deadweight losses. 
B) a low marginal tax rate. 
C) minimal wasting of resources. 
D) taxing at a rate that is positively related to price elasticity of demand. 
E) taxing at a rate that is inversely related to price elasticity of supply. 
A) minimum deadweight losses. 
B) a low marginal tax rate. 
C) minimal wasting of resources. 
D) taxing at a rate that is positively related to price elasticity of demand. 
E) taxing at a rate that is inversely related to price elasticity of supply.

Question 13

Under what circumstance would an increase in the payroll tax paid by employers cause the wage to fall by the same percentage as the tax increase, regardless of the labor supply curve's elasticity?

Accepted Answer

This scenario would

Question 14

In the United States, income distribution is more even than wealth distribution.

Accepted Answer

A) True 
 B)False

Question 15

In the case of complete income equality, the Lorenz curve

Accepted Answer

A) slopes downward. 
B) is a vertical line. 
C) is a horizontal line. 
D) is a 45-degree line from the origin. 
E) does not exist. 
A) slopes downward. 
B) is a vertical line. 
C) is a horizontal line. 
D) is a 45-degree line from the origin. 
E) does not exist.

Question 16

Which of the following statements about mandated employer benefits is not true?

Accepted Answer

A) A mandated benefit increases labor supply. 
B) Laborers generally value mandated benefits more highly than higher wages. 
C) A mandated benefit decreases labor demand. 
D) Wages tend to be depressed by mandated benefits. 
E) A federal law that requires employers to give employees time off to care for sick relatives in an example of a mandated benefit. 
A) A mandated benefit increases labor supply. 
B) Laborers generally value mandated benefits more highly than higher wages. 
C) A mandated benefit decreases labor demand. 
D) Wages tend to be depressed by mandated benefits. 
E) A federal law that requires employers to give employees time off to care for sick relatives in an example of a mandated benefit.

Question 17

Which of the following statements concerning the income distribution in the world is true?

Accepted Answer

A) Bangladesh has a less equal distribution of income than the United States. 
B) The Gini coefficient for the world as a whole is larger than it is for many nations. 
C) The distribution of income in undeveloped nations varies less than it does in developed nations. 
D) Most European countries have more equal distributions of income than the United States. 
E) The poorer a nation, the more equal the distribution of income. 
A) Bangladesh has a less equal distribution of income than the United States. 
B) The Gini coefficient for the world as a whole is larger than it is for many nations. 
C) The distribution of income in undeveloped nations varies less than it does in developed nations. 
D) Most European countries have more equal distributions of income than the United States. 
E) The poorer a nation, the more equal the distribution of income.

Question 18

If an individual earns an additional $200 and has to pay an additional $25 in income tax, his or her marginal tax rate is

Accepted Answer

A) 25 percent. 
B) 12.5 percent. 
C) 2.5 percent. 
D) 2 percent. 
E) 40 percent. 
A) 25 percent. 
B) 12.5 percent. 
C) 2.5 percent. 
D) 2 percent. 
E) 40 percent.

Question 19

Means-tested government transfer programs may reduce work incentives because

Accepted Answer

A) only lazy people participate in these programs. 
B) these programs actually pay people not to work. 
C) a family can live a very comfortable, middle-class lifestyle on welfare payments. 
D) for every additional dollar earned, welfare payments are reduced, effectively lowering the wage. 
E) these programs allow people to make money working only part-time. 
A) only lazy people participate in these programs. 
B) these programs actually pay people not to work. 
C) a family can live a very comfortable, middle-class lifestyle on welfare payments. 
D) for every additional dollar earned, welfare payments are reduced, effectively lowering the wage. 
E) these programs allow people to make money working only part-time.

Question 20

In terms of income, the top fifth of households in the United States earn approximately half of the nation's income.

Accepted Answer

A) True 
 B)False

Exam 14: Taxes, Transfers, and Income Distribution

One determinant of the official poverty-line income is the cost of

In the United States, the top quintile of families earn about ____ percent of the income.

Exhibit 14-5 -Refer to Exhibit 14-5. We can say that the poorest 20 percent of Urbanal's population receives

The ability-to-pay principle is the idea that only those who have very high incomes should pay any taxes at all.

In a progressive tax system, anyone earning a positive amount of income must pay some income tax.

Tax incidence refers to who bears the tax burden.

A tax bracket is a(n)

The table below gives hours worked per month and welfare payments received.

In looking at the distribution of income provided by quintile statistics and the Lorenz curve, it must be kept in mind that

If the demand for a good is very price-elastic, then the imposition of a per-unit tax on that good will cause

Exhibit 14-1 -Refer to Exhibit 14-1. An individual making $75,000 pays an average tax rate of

An efficient tax system should include all the following except

Under what circumstance would an increase in the payroll tax paid by employers cause the wage to fall by the same percentage as the tax increase, regardless of the labor supply curve's elasticity?

In the United States, income distribution is more even than wealth distribution.

In the case of complete income equality, the Lorenz curve

Which of the following statements about mandated employer benefits is not true?

Which of the following statements concerning the income distribution in the world is true?

If an individual earns an additional $200 and has to pay an additional $25 in income tax, his or her marginal tax rate is

Means-tested government transfer programs may reduce work incentives because

In terms of income, the top fifth of households in the United States earn approximately half of the nation's income.

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

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