Question 1

More than 50 percent of local and state employees are employed in the education sector.

Accepted Answer

A) True 
 B)False  True

Question 2

The three most important sources of federal tax revenue in order of descending importance are

Accepted Answer

A) sales, payroll, and personal income taxes. 
B) personal income, corporate income, and sales taxes. 
C) personal income, corporate income, and payroll taxes. 
D) personal income, payroll, and corporate income taxes.Difficulty: 01 Easy 
A) sales, payroll, and personal income taxes. 
B) personal income, corporate income, and sales taxes. 
C) personal income, corporate income, and payroll taxes. 
D) personal income, payroll, and corporate income taxes.Difficulty: 01 Easy D

Question 3

Which of the following statements about government borrowing is not true?

Accepted Answer

A) It provides the government the ability to maintain spending levels during economic downturns. 
B) "Crowding out" of private investments is a major opportunity cost of government borrowing. 
C) Its opportunity cost is likely to be quite high during an economic downturn. 
D) A bigger budget deficit will result in a bigger amount of government borrowing. 
A) It provides the government the ability to maintain spending levels during economic downturns. 
B) "Crowding out" of private investments is a major opportunity cost of government borrowing. 
C) Its opportunity cost is likely to be quite high during an economic downturn. 
D) A bigger budget deficit will result in a bigger amount of government borrowing. C

Question 4

Proprietary income refers to

Accepted Answer

A) revenue flowing to the government from taxes. 
B) money borrowed by the government to finance its operations. 
C) revenue generated by government-run businesses. 
D) transfer payments from the government to the owners of property resources. 
A) revenue flowing to the government from taxes. 
B) money borrowed by the government to finance its operations. 
C) revenue generated by government-run businesses. 
D) transfer payments from the government to the owners of property resources.

Question 5

(Consider This) 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. 
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 6

If an income tax is progressive, the average tax rate will increase as incomes increase.

Accepted Answer

A) True 
 B)False

Question 7

In 2015, corporate income taxes contributed about what percentage of U.S.federal tax revenues?

Accepted Answer

A) 10 percent 
B) 25 percent 
C) 50 percent 
D) 70 percent 
A) 10 percent 
B) 25 percent 
C) 50 percent 
D) 70 percent

Question 8

From 1960 to 2015, as percentages of U.S.output, government purchases have

Accepted Answer

A) declined, but transfer payments have increased significantly. 
B) remained about the same, while transfer payments have increased slightly. 
C) increased sharply, but transfer payments have also decreased significantly. 
D) increased slightly, while transfer payments have remained about the same. 
A) declined, but transfer payments have increased significantly. 
B) remained about the same, while transfer payments have increased slightly. 
C) increased sharply, but transfer payments have also decreased significantly. 
D) increased slightly, while transfer payments have remained about the same.

Question 9

The average tax rate is

Accepted Answer

A) equal to the change in taxes/change in taxable income. 
B) equal to total taxes/total taxable income. 
C) the sum of the marginal tax rate and the rate of transfer payments. 
D) the tax on incremental income less the tax on total income. 
A) equal to the change in taxes/change in taxable income. 
B) equal to total taxes/total taxable income. 
C) the sum of the marginal tax rate and the rate of transfer payments. 
D) the tax on incremental income less the tax on total income.

Question 10

If government levies a tax or fee on hunting licenses and uses the resulting revenue for wildlife stocking programs, this would be an example of

Accepted Answer

A) a progressive tax. 
B) a regressive tax. 
C) the ability-to-pay principle of taxation. 
D) the benefits-received principle of taxation. 
A) a progressive tax. 
B) a regressive tax. 
C) the ability-to-pay principle of taxation. 
D) the benefits-received principle of taxation.

Question 11

The supply curve for a product has infinite elasticity.An excise tax is levied on the product.The likely effect will be to

Accepted Answer

A) reduce the amount the producer receives for each unit sold by the amount of the tax. 
B) increase the price the consumer pays per unit by the amount of the tax. 
C) increase the price to consumers by an amount less than the tax. 
D) increase the amount received by producers by less than the tax. 
A) reduce the amount the producer receives for each unit sold by the amount of the tax. 
B) increase the price the consumer pays per unit by the amount of the tax. 
C) increase the price to consumers by an amount less than the tax. 
D) increase the amount received by producers by less than the tax.

Question 12

With a proportional tax, higher-income persons will pay

Accepted Answer

A) the same amount of taxes as lower-income persons. 
B) a bigger amount in taxes compared to lower-income persons. 
C) a higher proportion of their income in taxes than lower-income persons. 
D) a higher marginal tax rate as their incomes rise. 
A) the same amount of taxes as lower-income persons. 
B) a bigger amount in taxes compared to lower-income persons. 
C) a higher proportion of their income in taxes than lower-income persons. 
D) a higher marginal tax rate as their incomes rise.

Question 13

The marginal tax rate is

Accepted Answer

A) less than the average tax rate when a tax is progressive. 
B) calculated by dividing total taxes paid by one's total taxable income. 
C) the percentage of one's total income that is paid in taxes. 
D) the percentage of an increment of income that is paid in taxes. 
A) less than the average tax rate when a tax is progressive. 
B) calculated by dividing total taxes paid by one's total taxable income. 
C) the percentage of one's total income that is paid in taxes. 
D) the percentage of an increment of income that is paid in taxes.

Question 14

At the state and local levels of the U.S.government, a majority of government employees work in which of the following areas?

Accepted Answer

A) postal service 
B) education 
C) hospitals and other health care 
D) police and corrections 
A) postal service 
B) education 
C) hospitals and other health care 
D) police and corrections

Question 15

The levying of licensing fees for automobiles is an example of taxation based on the ability-to-pay principle.

Accepted Answer

A) True 
 B)False

Question 16

Joe complains that 32 percent of his income last year went to taxes.He is referring to his

Accepted Answer

A) average tax rate. 
B) marginal tax rate. 
C) proportional tax rate. 
D) progressive tax rate. 
A) average tax rate. 
B) marginal tax rate. 
C) proportional tax rate. 
D) progressive tax rate.

Question 17

(Advanced analysis) The equations for the demand and supply curves for a particular product are P = 10 − 0.4Q and P = 2 + 0.4Q, 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 + 0.4Q.The excise tax on each unit of the product

Accepted Answer

A) is $1. 
B) is $2. 
C) is $3. 
D) cannot be determined with the information given. 
A) is $1. 
B) is $2. 
C) is $3. 
D) cannot be determined with the information given.

Question 18

In 2013, the largest portion of federal employees were in which of the following sectors?

Accepted Answer

A) education and health care 
B) police and natural resources 
C) postal service and national defense 
D) judicial, police, and administration 
A) education and health care 
B) police and natural resources 
C) postal service and national defense 
D) judicial, police, and administration

Question 19

Assume you pay a tax of $4,000 on a taxable income of $24,000.If your taxable income were $30,000, your tax payment would be $5,000.This suggests that the tax is

Accepted Answer

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

Question 20

In the U.S., the taxes mostly come from the rich and government spending mostly goes to programs that benefit the rich.

Accepted Answer

A) True 
 B)False

Exam 20: Public Finance: Expenditures and Taxes

More than 50 percent of local and state employees are employed in the education sector.

The three most important sources of federal tax revenue in order of descending importance are

Which of the following statements about government borrowing is not true?

Proprietary income refers to

(Consider This) Which of the following claims is not made by defenders of lotteries?

If an income tax is progressive, the average tax rate will increase as incomes increase.

In 2015, corporate income taxes contributed about what percentage of U.S.federal tax revenues?

From 1960 to 2015, as percentages of U.S.output, government purchases have

The average tax rate is

If government levies a tax or fee on hunting licenses and uses the resulting revenue for wildlife stocking programs, this would be an example of

The supply curve for a product has infinite elasticity.An excise tax is levied on the product.The likely effect will be to

With a proportional tax, higher-income persons will pay

The marginal tax rate is

At the state and local levels of the U.S.government, a majority of government employees work in which of the following areas?

The levying of licensing fees for automobiles is an example of taxation based on the ability-to-pay principle.

Joe complains that 32 percent of his income last year went to taxes.He is referring to his

In 2013, the largest portion of federal employees were in which of the following sectors?

Assume you pay a tax of $4,000 on a taxable income of $24,000.If your taxable income were $30,000, your tax payment would be $5,000.This suggests that the tax is

In the U.S., the taxes mostly come from the rich and government spending mostly goes to programs that benefit the rich.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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