Question 1

Economists Chamberlain and Prante of the Tax Foundation note that if the U.S.population in 2012 were grouped into quintiles by income,

Accepted Answer

A) only the top income quintile paid more in taxes than the benefits they received from government spending. 
B) the top two income quintiles paid more in taxes than the benefits they received from government spending. 
C) the top three income quintiles paid more in taxes than the benefits they received from government spending. 
D) only the bottom income quintile paid less in taxes than the benefits they received from government spending. 
A) only the top income quintile paid more in taxes than the benefits they received from government spending. 
B) the top two income quintiles paid more in taxes than the benefits they received from government spending. 
C) the top three income quintiles paid more in taxes than the benefits they received from government spending. 
D) only the bottom income quintile paid less in taxes than the benefits they received from government spending.

Question 2

When Supreme Court Justice Oliver Wendell Holmes stated, "Taxes are the price we pay for civilization," he meant that

Accepted Answer

A) all cultural and educational services and events need to be taxed. 
B) taxes are the major source of funding for the goods and services provided by government. 
C) tax rates should be higher on higher-income well-educated households. 
D) we should collect taxes mostly from those who benefit from the government-provided goods and services. 
A) all cultural and educational services and events need to be taxed. 
B) taxes are the major source of funding for the goods and services provided by government. 
C) tax rates should be higher on higher-income well-educated households. 
D) we should collect taxes mostly from those who benefit from the government-provided goods and services.

Question 3

The supply of meat is more elastic in the long run than in the short run.Ceteris paribus, as time goes by, the burden of a tax on cattle will increasingly be shouldered by the

Accepted Answer

A) grocer. 
B) government. 
C) rancher. 
D) consumer. 
A) grocer. 
B) government. 
C) rancher. 
D) consumer.

Question 4

A tax is regressive if it

Accepted Answer

A) takes a higher percentage of income as income increases. 
B) takes the same percentage of income regardless of income level. 
C) takes a smaller percentage of income as income increases. 
D) is levied on consumers. 
A) takes a higher percentage of income as income increases. 
B) takes the same percentage of income regardless of income level. 
C) takes a smaller percentage of income as income increases. 
D) is levied on consumers.

Question 5

The following are government activities that are involved in public finance, except

Accepted Answer

A) providing public goods and services, such as national defense and education. 
B) running government-owned enterprises, such as hospitals, utilities, and lotteries 
C) redistributing income through various taxes and income-transfer payments, 
D) regulating the activities of firms in the financial sector of the economy, 
A) providing public goods and services, such as national defense and education. 
B) running government-owned enterprises, such as hospitals, utilities, and lotteries 
C) redistributing income through various taxes and income-transfer payments, 
D) regulating the activities of firms in the financial sector of the economy,

Question 6

Total governmental purchases-federal, state, and local combined-accounted for about what percentage of domestic output in 2015?

Accepted Answer

A) 35 percent 
B) 18 percent 
C) 10 percent 
D) 5 percent 
A) 35 percent 
B) 18 percent 
C) 10 percent 
D) 5 percent

Question 7

(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 equilibrium quantity before the excise tax is imposed is

Accepted Answer

A) 800 units. 
B) 1,000 units. 
C) 1,200 units. 
D) 1,400 units. 
A) 800 units. 
B) 1,000 units. 
C) 1,200 units. 
D) 1,400 units.

Question 8

Which of the following taxes is most likely to be shifted?

Accepted Answer

A) a general sales tax 
B) a flat-rate state income tax 
C) a progressive federal income tax 
D) a property tax on an owner-occupied residence 
A) a general sales tax 
B) a flat-rate state income tax 
C) a progressive federal income tax 
D) a property tax on an owner-occupied residence

Question 9

The federal tax system is

Accepted Answer

A) proportional, while state and local tax structures are largely progressive. 
B) progressive, while state and local tax structures are largely regressive. 
C) regressive, while state and local tax structures are largely proportional. 
D) regressive, while state and local tax structures are largely progressive. 
A) proportional, while state and local tax structures are largely progressive. 
B) progressive, while state and local tax structures are largely regressive. 
C) regressive, while state and local tax structures are largely proportional. 
D) regressive, while state and local tax structures are largely progressive.

Question 10

The major sources of funds for the U.S.federal government include the following, except

Accepted Answer

A) payroll taxes. 
B) proprietary income. 
C) borrowing. 
D) general sales taxes. 
A) payroll taxes. 
B) proprietary income. 
C) borrowing. 
D) general sales taxes.

Question 11

The federal income tax is consistent with the principle of taxation, whereas an excise tax on sporting event tickets is consistent with the principle of taxation.

Accepted Answer

A) benefits-received; ability-to-pay 
B) benefits-received; pay-as-you-go 
C) ability-to-pay; benefits-received 
D) ability-to-pay; pay-as-you-go 
A) benefits-received; ability-to-pay 
B) benefits-received; pay-as-you-go 
C) ability-to-pay; benefits-received 
D) ability-to-pay; pay-as-you-go

Question 12

In general, the buyers will tend to pay a bigger share of a tax on a good when

Accepted Answer

A) the price elasticities of supply and demand are low. 
B) the price elasticities of supply and demand are high. 
C) the price elasticity of supply is low and the price elasticity of demand is high. 
D) the price elasticity of supply is high and the price elasticity of demand is low. 
A) the price elasticities of supply and demand are low. 
B) the price elasticities of supply and demand are high. 
C) the price elasticity of supply is low and the price elasticity of demand is high. 
D) the price elasticity of supply is high and the price elasticity of demand is low.

Question 13

The benefits-received principle of taxation is most evident in

Accepted Answer

A) inheritance taxes. 
B) excise taxes on gasoline. 
C) the personal income tax. 
D) the corporate income tax. 
A) inheritance taxes. 
B) excise taxes on gasoline. 
C) the personal income tax. 
D) the corporate income tax.

Question 14

The more inelastic are demand and supply, the

Accepted Answer

A) larger is the efficiency loss of an excise tax. 
B) smaller is the efficiency loss of an excise tax. 
C) higher is the proportion of an excise tax paid by consumers. 
D) smaller is the proportion of an excise tax paid by producers. 
A) larger is the efficiency loss of an excise tax. 
B) smaller is the efficiency loss of an excise tax. 
C) higher is the proportion of an excise tax paid by consumers. 
D) smaller is the proportion of an excise tax paid by producers.

Question 15

Which of the following is necessarily true if the government were to replace a progressive income tax system with a proportional one?

Accepted Answer

A) Lower income groups would pay less tax. 
B) Higher income groups would pay less tax. 
C) Lower income groups would pay more tax. 
D) The distribution of after-tax income would become less equal. 
A) Lower income groups would pay less tax. 
B) Higher income groups would pay less tax. 
C) Lower income groups would pay more tax. 
D) The distribution of after-tax income would become less equal.

Question 16

The overall tax structure of the United States is proportional or slightly regressive.

Accepted Answer

A) True 
 B)False

Question 17

The interest on public debt is more than 10 percent of federal government expenditures.

Accepted Answer

A) True 
 B)False

Question 18

If you pay a $2,000 tax on $10,000 of taxable income and a $4,000 tax on a taxable income of $16,000, the tax is progressive.

Accepted Answer

A) True 
 B)False

Question 19

The major expenditure of local governments is for education.

Accepted Answer

A) True 
 B)False

Question 20

Which statement best describes the overall tax and transfer systems of the United States?

Accepted Answer

A) Our tax system makes the after-tax distribution of income much more equal than the before-tax distribution. 
B) Our tax system does not by itself reallocate income; transfer payments help redistribute income from rich to poor. 
C) Although some federal taxes are progressive, this effect is more than offset by the regressivity of state and local taxes, which make the overall system extremely regressive. 
D) Recent changes in corporate income taxes and payroll taxes have made our overall tax system more progressive. 
A) Our tax system makes the after-tax distribution of income much more equal than the before-tax distribution. 
B) Our tax system does not by itself reallocate income; transfer payments help redistribute income from rich to poor. 
C) Although some federal taxes are progressive, this effect is more than offset by the regressivity of state and local taxes, which make the overall system extremely regressive. 
D) Recent changes in corporate income taxes and payroll taxes have made our overall tax system more progressive.

Exam 20: Public Finance: Expenditures and Taxes

Economists Chamberlain and Prante of the Tax Foundation note that if the U.S.population in 2012 were grouped into quintiles by income,

When Supreme Court Justice Oliver Wendell Holmes stated, "Taxes are the price we pay for civilization," he meant that

The supply of meat is more elastic in the long run than in the short run.Ceteris paribus, as time goes by, the burden of a tax on cattle will increasingly be shouldered by the

A tax is regressive if it

The following are government activities that are involved in public finance, except

Total governmental purchases-federal, state, and local combined-accounted for about what percentage of domestic output in 2015?

Which of the following taxes is most likely to be shifted?

The federal tax system is

The major sources of funds for the U.S.federal government include the following, except

The federal income tax is consistent with the principle of taxation, whereas an excise tax on sporting event tickets is consistent with the principle of taxation.

In general, the buyers will tend to pay a bigger share of a tax on a good when

The benefits-received principle of taxation is most evident in

The more inelastic are demand and supply, the

Which of the following is necessarily true if the government were to replace a progressive income tax system with a proportional one?

The overall tax structure of the United States is proportional or slightly regressive.

The interest on public debt is more than 10 percent of federal government expenditures.

If you pay a $2,000 tax on $10,000 of taxable income and a $4,000 tax on a taxable income of $16,000, the tax is progressive.

The major expenditure of local governments is for education.

Which statement best describes the overall tax and transfer systems of the United States?

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

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The Demand for Resources

Wage Determination

Rent, Interest, and Profit

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Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

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Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

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Aggregate Demand and Aggregate Supply

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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

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The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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