Question 1

A statistical tool used to measure income inequality is

Accepted Answer

A)  the Herfindahl-Hirschman index. 
B)  the Gini coefficient. 
C)  the absolute poverty rate. 
D)  the relative poverty rate. 
A)  the Herfindahl-Hirschman index. 
B)  the Gini coefficient. 
C)  the absolute poverty rate. 
D)  the relative poverty rate.

Question 2

A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises.

Accepted Answer

A) True 
 B)False

Question 3

Exempting food purchases from sales tax is consistent with the ability-to-pay principle, although not necessarily consistent with vertical equity.

Accepted Answer

A) True 
 B)False

Question 4

Table 18-3
  
-Refer to Table 18-3. The table above outlines the rankings of three members of the U.S. Senate on three spending alternatives. Assume that Congress can spend additional revenue on only one of the three spending alternatives and that Bart, Lisa, and Maggie, all members of the Senate, participate in a series of votes in which they are to determine which of the spending alternatives should receive funding. Three votes will be taken: (1) Immigration Reform and Unemployment Benefits (2) Immigration Reform and Social Security Reform and (3) Unemployment Benefits and Social Security Reform.
Show the results of each vote and determine whether the voting paradox will occur as a result of these votes.

Accepted Answer

First vote:
 @#IMG-DLM& First vote: the majority v

Question 5

What is the voting paradox?

Accepted Answer

A)  the observation that less than 60 percent of those eligible to vote actually vote 
B)  the observation that majority voting may not always result in consistent choices 
C)  the idea that wealthy corporations are able to sway politicians to act in ways contrary to the desires of the majority 
D)  people are aware that their votes will not change the political outcome since these outcomes are predetermined by a group of influential politicians 
A)  the observation that less than 60 percent of those eligible to vote actually vote 
B)  the observation that majority voting may not always result in consistent choices 
C)  the idea that wealthy corporations are able to sway politicians to act in ways contrary to the desires of the majority 
D)  people are aware that their votes will not change the political outcome since these outcomes are predetermined by a group of influential politicians

Question 6

Between 1970 and 2010, the poverty rate in East Asia declined dramatically from about 60 percent to less than 1 percent, while the poverty rate in sub-Saharan Africa decreased from 40 percent to only 24 percent. The main reason for this is that

Accepted Answer

A)  the population growth rate decreased in East Asia and increased in sub-Saharan Africa. 
B)  Governments in East Asia increased transfer payments to poor families over this period of time. The governments of sub-Saharan Africa had practically no transfer payment programs from 1970 to 2010. 
C)  The countries of East Asia have progressive income tax systems. The countries of sub-Saharan Africa all have regressive income tax systems. 
D)  East Asia experienced higher economic growth than sub-Saharan Africa. 
A)  the population growth rate decreased in East Asia and increased in sub-Saharan Africa. 
B)  Governments in East Asia increased transfer payments to poor families over this period of time. The governments of sub-Saharan Africa had practically no transfer payment programs from 1970 to 2010. 
C)  The countries of East Asia have progressive income tax systems. The countries of sub-Saharan Africa all have regressive income tax systems. 
D)  East Asia experienced higher economic growth than sub-Saharan Africa.

Question 7

Table 18-8
   Table 18-8 shows the amount of taxes paid on various levels of income.
-Refer to Table 18-8. The tax system is

Accepted Answer

A)  progressive throughout all levels of income. 
B)  proportional throughout all levels of income. 
C)  regressive throughout all levels of income. 
D)  progressive between $10,000 and $12,000 of income and regressive between $12,000 and $22,000. 
A)  progressive throughout all levels of income. 
B)  proportional throughout all levels of income. 
C)  regressive throughout all levels of income. 
D)  progressive between $10,000 and $12,000 of income and regressive between $12,000 and $22,000.

Question 8

Figure 18-1  
-Refer to Figure 18-1. Area B + C represents

Accepted Answer

A)  the portion of sales tax revenue borne by consumers. 
B)  the portion of sales tax revenue borne by producers. 
C)  the excess burden of the sales tax. 
D)  sales tax revenue collected by the government. 
A)  the portion of sales tax revenue borne by consumers. 
B)  the portion of sales tax revenue borne by producers. 
C)  the excess burden of the sales tax. 
D)  sales tax revenue collected by the government.

Question 9

Horizontal equity is achieved when taxes are collected from those who benefit from the government expenditure of the tax revenue.

Accepted Answer

A) True 
 B)False

Question 10

All of the following occur whenever a government taxes a product except

Accepted Answer

A)  the quantity consumed of that product falls. 
B)  the price of that product rises. 
C)  the marginal benefit of the last unit sold exceeds the marginal cost of producing it. 
D)  there will be no excess burden if the government's tax revenue is sufficiently large to offset the deadweight loss. 
A)  the quantity consumed of that product falls. 
B)  the price of that product rises. 
C)  the marginal benefit of the last unit sold exceeds the marginal cost of producing it. 
D)  there will be no excess burden if the government's tax revenue is sufficiently large to offset the deadweight loss.

Question 11

In 2016, which type of tax raised the most revenue for the U.S. federal government? Which type of tax raised the most revenue for state and local governments?

Accepted Answer

In 2016, individual income taxes raised

Question 12

If, as your taxable income decreases, you pay a larger percentage of your taxable income in taxes, then the tax is

Accepted Answer

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

Question 13

Table 18-6
   Table 18-6 shows the income tax brackets and tax rates for single taxpayers in Calpernia.
-Refer to Table 18-6. Sasha is a single taxpayer with an income of $60,000. What is his marginal tax rate and what is his average tax rate?

Accepted Answer

A)  marginal tax rate = 38%; average tax rate = 23% 
B)  marginal tax rate = 17%; average tax rate = 21% 
C)  marginal tax rate = 38%; average tax rate = 24% 
D)  marginal tax rate = 23%; average tax rate = 38% 
A)  marginal tax rate = 38%; average tax rate = 23% 
B)  marginal tax rate = 17%; average tax rate = 21% 
C)  marginal tax rate = 38%; average tax rate = 24% 
D)  marginal tax rate = 23%; average tax rate = 38%

Question 14

Describe each of the principles governments consider when deciding which taxes to use.

Accepted Answer

In deciding which taxes to use, a govern

Question 15

If grocery stores were legally required to charge a 10-cent fee for disposable grocery bags, who would bear the largest burden of this fee?

Accepted Answer

Since consumers need groceries and would

Question 16

In the United States, the federal income tax is an example of a

Accepted Answer

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

Question 17

Figure 18-1  
-Refer to Figure 18-1. The sales tax revenue collected by the government is represented by the area

Accepted Answer

A)  B + C. 
B)  F + G. 
C)  E + H. 
D)  B + C + F + G. 
A)  B + C. 
B)  F + G. 
C)  E + H. 
D)  B + C + F + G.

Question 18

In the United States

Accepted Answer

A)  the income tax system has little or no impact on the distribution of income. 
B)  the after-tax income distribution of income is more equal than the before-tax distribution. 
C)  once a person is in poverty, it is very difficult for a person to get out of poverty. 
D)  the degree of income mobility is relatively low. 
A)  the income tax system has little or no impact on the distribution of income. 
B)  the after-tax income distribution of income is more equal than the before-tax distribution. 
C)  once a person is in poverty, it is very difficult for a person to get out of poverty. 
D)  the degree of income mobility is relatively low.

Question 19

Compare the distribution of income in the United States with the distribution of income in other high-income countries.

Accepted Answer

The United States has the most

Question 20

A key assumption of the public choice model is that government policymakers will pursue their own self-interests. Economists assume that consumers and firms pursue their own self-interests when they interact in competitive markets and this interaction results in efficient economic outcomes. Does the pursuit of self-interest by policymakers result in efficient economic outcomes?

Accepted Answer

The public choice model can be used to e

Exam 18: Public Choice, Taxes, and the Distribution of Income

A statistical tool used to measure income inequality is

A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises.

Exempting food purchases from sales tax is consistent with the ability-to-pay principle, although not necessarily consistent with vertical equity.

What is the voting paradox?

Between 1970 and 2010, the poverty rate in East Asia declined dramatically from about 60 percent to less than 1 percent, while the poverty rate in sub-Saharan Africa decreased from 40 percent to only 24 percent. The main reason for this is that

Table 18-8 Table 18-8 shows the amount of taxes paid on various levels of income. -Refer to Table 18-8. The tax system is

Figure 18-1 -Refer to Figure 18-1. Area B + C represents

Horizontal equity is achieved when taxes are collected from those who benefit from the government expenditure of the tax revenue.

All of the following occur whenever a government taxes a product except

In 2016, which type of tax raised the most revenue for the U.S. federal government? Which type of tax raised the most revenue for state and local governments?

If, as your taxable income decreases, you pay a larger percentage of your taxable income in taxes, then the tax is

Table 18-6 Table 18-6 shows the income tax brackets and tax rates for single taxpayers in Calpernia. -Refer to Table 18-6. Sasha is a single taxpayer with an income of $60,000. What is his marginal tax rate and what is his average tax rate?

Describe each of the principles governments consider when deciding which taxes to use.

If grocery stores were legally required to charge a 10-cent fee for disposable grocery bags, who would bear the largest burden of this fee?

In the United States, the federal income tax is an example of a

Figure 18-1 -Refer to Figure 18-1. The sales tax revenue collected by the government is represented by the area

In the United States

Compare the distribution of income in the United States with the distribution of income in other high-income countries.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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