Question 1

The average tax rate is

Accepted Answer

A) equal to the marginal tax rate if the tax is progressive. 
B) the total tax rate minus the marginal tax rate. 
C) the ratio of total taxes paid to total taxable income. 
D) the tax rate that applies to incremental dollars of income. 
A) equal to the marginal tax rate if the tax is progressive. 
B) the total tax rate minus the marginal tax rate. 
C) the ratio of total taxes paid to total taxable income. 
D) the tax rate that applies to incremental dollars of income.

Question 2

Property taxes are

Accepted Answer

A) collected primarily at the federal level. 
B) the largest source of tax revenue for local governments. 
C) the primary source of federal revenue-sharing funds. 
D) used primarily by states to finance state welfare programs. 
A) collected primarily at the federal level. 
B) the largest source of tax revenue for local governments. 
C) the primary source of federal revenue-sharing funds. 
D) used primarily by states to finance state welfare programs.

Question 3

In 2014, based on data from the OECD, the government's total tax revenue as a percentage of total output was highest in which of the following nations?

Accepted Answer

A) Germany 
B) France 
C) United States 
D) Mexico 
A) Germany 
B) France 
C) United States 
D) Mexico

Question 4

Which of the following statements about payroll taxes is false?

Accepted Answer

A) They provide funds for Social Security. 
B) They include Medicare taxes. 
C) Both employers and employees pay these taxes. 
D) They are lump-sum taxes not based on wages/salaries. 
A) They provide funds for Social Security. 
B) They include Medicare taxes. 
C) Both employers and employees pay these taxes. 
D) They are lump-sum taxes not based on wages/salaries.

Question 5

The marginal tax rate is the tax rate that applies to additional income.

Accepted Answer

A) True 
 B)False

Question 6

The government is like business firms in that it provides goods and services to households and businesses.

Accepted Answer

A) True 
 B)False

Question 7

The so-called Tax Freedom Day of each year recognizes the day that

Accepted Answer

A) the federal government requires taxpayers to submit their taxes to the Internal Revenue Service. 
B) charitable contributions were made legal under the tax codes of the United States government. 
C) the U.S.Supreme Court ruled that double taxation of income was illegal for corporations and businesses. 
D) the average worker had earned enough income to pay his or her share of government spending for that year. 
A) the federal government requires taxpayers to submit their taxes to the Internal Revenue Service. 
B) charitable contributions were made legal under the tax codes of the United States government. 
C) the U.S.Supreme Court ruled that double taxation of income was illegal for corporations and businesses. 
D) the average worker had earned enough income to pay his or her share of government spending for that year.

Question 8

The incidence of taxation refers to

Accepted Answer

A) who in society actually pays a tax. 
B) the structure of basic income tax rates. 
C) whether taxes are progressive or regressive. 
D) whether or not the benefits-received principle applies. 
A) who in society actually pays a tax. 
B) the structure of basic income tax rates. 
C) whether taxes are progressive or regressive. 
D) whether or not the benefits-received principle applies.

Question 9

In 2013, the top 5 percent of income-tax filers paid what portion of the total U.S.federal income tax?

Accepted Answer

A) close to 60 percent 
B) about 30 percent 
C) less than 20 percent 
D) more than 80 percent 
A) close to 60 percent 
B) about 30 percent 
C) less than 20 percent 
D) more than 80 percent

Question 10

Government borrowing

Accepted Answer

A) is the primary means of financing public expenditures. 
B) provides a stimulus to government spending with no opportunity cost. 
C) may crowd out private sector investment. 
D) is prohibited by the U.S.constitution. 
A) is the primary means of financing public expenditures. 
B) provides a stimulus to government spending with no opportunity cost. 
C) may crowd out private sector investment. 
D) is prohibited by the U.S.constitution.

Question 11

The largest category of federal spending is for

Accepted Answer

A) health care. 
B) science, space, and technology. 
C) pensions and income security. 
D) national defense. 
A) health care. 
B) science, space, and technology. 
C) pensions and income security. 
D) national defense.

Question 12

The largest expenditure of the U.S.federal government is for

Accepted Answer

A) education. 
B) national defense. 
C) pensions and income security. 
D) interest on public debt. 
A) education. 
B) national defense. 
C) pensions and income security. 
D) interest on public debt.

Question 13

If taxes are $2,000 when income is $15,000 and they are $3,000 when income is $19,000, then the marginal tax rate is

Accepted Answer

A) 20 percent. 
B) 25 percent. 
C) 30 percent. 
D) 40 percent. 
A) 20 percent. 
B) 25 percent. 
C) 30 percent. 
D) 40 percent.

Question 14

A highly progressive tax takes relatively more from the rich than it does from the poor.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following best reflects the ability-to-pay philosophy of taxation?

Accepted Answer

A) a tax on residential property 
B) a progressive income tax 
C) an excise tax on gasoline 
D) an excise tax on coffee 
A) a tax on residential property 
B) a progressive income tax 
C) an excise tax on gasoline 
D) an excise tax on coffee

Question 16

If the demand for a product is perfectly inelastic and the supply curve is upsloping, a $1 excise tax per unit of output will

Accepted Answer

A) raise the price by less than $1. 
B) raise the price by more than $1. 
C) raise the price by $1. 
D) lower the price by $1. 
A) raise the price by less than $1. 
B) raise the price by more than $1. 
C) raise the price by $1. 
D) lower the price by $1.

Question 17

If the supply of a product is perfectly elastic and demand is downsloping, an excise tax of $2 per unit will increase price by

Accepted Answer

A) more than $2. 
B) less than $2. 
C) $2 and increase equilibrium output. 
D) $2 and reduce equilibrium output. 
A) more than $2. 
B) less than $2. 
C) $2 and increase equilibrium output. 
D) $2 and reduce equilibrium output.

Question 18

The basic source of state government's revenue is the property tax.

Accepted Answer

A) True 
 B)False

Question 19

An income tax is progressive if the

Accepted Answer

A) absolute amount paid as taxes varies directly with income. 
B) percentage of income paid as taxes is the same regardless of the size of income. 
C) percentage of income paid as taxes increases as income increases. 
D) tax rate varies inversely with income. 
A) absolute amount paid as taxes varies directly with income. 
B) percentage of income paid as taxes is the same regardless of the size of income. 
C) percentage of income paid as taxes increases as income increases. 
D) tax rate varies inversely with income.

Question 20

If each taxpayer paid the same lump-sum amount regardless of income level, the tax system would be

Accepted Answer

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

Exam 20: Public Finance: Expenditures and Taxes

The average tax rate is

Property taxes are

In 2014, based on data from the OECD, the government's total tax revenue as a percentage of total output was highest in which of the following nations?

Which of the following statements about payroll taxes is false?

The marginal tax rate is the tax rate that applies to additional income.

The government is like business firms in that it provides goods and services to households and businesses.

The so-called Tax Freedom Day of each year recognizes the day that

The incidence of taxation refers to

In 2013, the top 5 percent of income-tax filers paid what portion of the total U.S.federal income tax?

Government borrowing

The largest category of federal spending is for

The largest expenditure of the U.S.federal government is for

If taxes are $2,000 when income is $15,000 and they are $3,000 when income is $19,000, then the marginal tax rate is

A highly progressive tax takes relatively more from the rich than it does from the poor.

Which of the following best reflects the ability-to-pay philosophy of taxation?

If the demand for a product is perfectly inelastic and the supply curve is upsloping, a $1 excise tax per unit of output will

If the supply of a product is perfectly elastic and demand is downsloping, an excise tax of $2 per unit will increase price by

The basic source of state government's revenue is the property tax.

An income tax is progressive if the

If each taxpayer paid the same lump-sum amount regardless of income level, the tax system would be

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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