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

Which of the following is the source of revenue for Medicare and Social Security in the United States?

The median voter theorem states that the outcome of a majority vote is likely to represent the preferences of the voter who is in the political middle.

Interest paid on home mortgages is deductible from individual income taxes. When comparing home owners and renters, the mortgage interest deduction is an example of

The median voter theorem implies that

Suppose the government wants to finance housing for low-income families by placing a tax on the purchase of luxury homes. Assume the government defines a luxury home as a home that is purchased for at least $1 million. This tax is consistent with the

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the consumer's burden of the tax

The public choice model asserts that the self-interest of policymakers is likely to cause them to take actions that are inconsistent with the preferences of voters, even where those preferences are clear.

The public choice model raises questions about the government's ability to regulate economic activity efficiently. Which of the following statements represents the views of most economists with regard to the role of government?

What is the United States government's formal definition of the poverty line?

Consider the following methods of taxing a corporation's income: a. A flat tax, as opposed to a progressive tax, is levied on corporate profits. b. A system whereby a corporation calculates its annual profit and notifies each shareholder of her portion of the profits. The shareholder would then be required to include this amount as taxable income for her personal income tax. The corporation does not pay a tax. c. A system where the federal government continues to tax corporate income through the corporate income tax but allows individual taxpayers to receive, tax free, corporate dividends and capital gains. Which of the methods above would avoid double taxation?

Public schools in the United States get most of their operating funds from

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the producer's burden of the tax

Table 18-9 Table 18-9 shows the income tax brackets and tax rates for single taxpayers in Monrovia. -Refer to Table 18-9. Sylvia is a single taxpayer with an income of $70,000. What is her marginal tax rate and what is her average tax rate?

Which of the following statements concerning the federal corporate income tax is true?

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

The actual division of a tax between buyers and sellers in a market is the excess burden of the tax.

Economist Kenneth Arrow has shown mathematically that no system of voting will consistently represent the underlying preferences of voters. This finding is called

Table 18-5 Table 18-5 shows the amount of taxes paid on various levels of income. -Refer to Table 18-5. The tax system is

Since lower-income people spend a larger proportion of their incomes on groceries than do higher-income people, if grocery stores were required by law to charge a 10-cent fee for disposable bags, this fee could be considered a

What is a Lorenz curve and what is a Gini coefficient?