Question 1

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 2

Using income as the tax base, which of the following best illustrates a regressive tax?

Accepted Answer

A) the federal inheritance tax 
B) a 7 percent general sales tax 
C) the corporate income tax 
D) the personal income tax 
A) the federal inheritance tax 
B) a 7 percent general sales tax 
C) the corporate income tax 
D) the personal income tax

Question 3

The largest portion of federal employees work in the national defense sector.

Accepted Answer

A) True 
 B)False

Question 4

The efficiency loss of a tax is the idea that

Accepted Answer

A) in addition to taking income from the citizenry, taxes also increase the rate of inflation. 
B) taxes cause a decline in output for which marginal benefit exceeds marginal cost. 
C) taxes diminish incentives to work. 
D) government spends dollars less efficiently than do households and businesses. 
A) in addition to taking income from the citizenry, taxes also increase the rate of inflation. 
B) taxes cause a decline in output for which marginal benefit exceeds marginal cost. 
C) taxes diminish incentives to work. 
D) government spends dollars less efficiently than do households and businesses.

Question 5

The table contains five tax schedules for an economy. All figures are in billions of dollars. Which of the schedules represent(s)a progressive tax?

Accepted Answer

A) V only 
B) III and V 
C) II and III 
D) III only 
A) V only 
B) III and V 
C) II and III 
D) III only

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

The tax revenues of local governments are typically

Accepted Answer

A) more than their expenditures. 
B) equal to their expenditures. 
C) slightly less than their expenditures. 
D) less than one-half of their expenditures. 
A) more than their expenditures. 
B) equal to their expenditures. 
C) slightly less than their expenditures. 
D) less than one-half of their expenditures.

Question 8

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 9

The addition of government to the circular-flow model illustrates that government

Accepted Answer

A) purchases resources in the resource market. 
B) provides services to businesses and households. 
C) purchases goods in the product market. 
D) does all of the things stated in the other possible answers. 
A) purchases resources in the resource market. 
B) provides services to businesses and households. 
C) purchases goods in the product market. 
D) does all of the things stated in the other possible answers.

Question 10

Which of the following is not an important source of revenue for the federal government?

Accepted Answer

A) corporate income taxes 
B) property taxes 
C) payroll taxes 
D) personal income taxes 
A) corporate income taxes 
B) property taxes 
C) payroll taxes 
D) personal income taxes

Question 11

The table represents a personal income tax schedule. The average tax rate at the $60,000 level of income is

Accepted Answer

A) 10.0 percent. 
B) 11.6 percent. 
C) 15.0 percent. 
D) 20.8 percent. 
A) 10.0 percent. 
B) 11.6 percent. 
C) 15.0 percent. 
D) 20.8 percent.

Question 12

The property tax may be regressive even though wealthy people own much more taxable property than do poor people. This possibility arises because

Accepted Answer

A) marginal and average tax rates on property tend to converge. 
B) wealthy people can evade property taxes, while poor people cannot. 
C) property taxes on rental property and business property are shifted. 
D) statutory property tax rates decline as the value of property rises. 
A) marginal and average tax rates on property tend to converge. 
B) wealthy people can evade property taxes, while poor people cannot. 
C) property taxes on rental property and business property are shifted. 
D) statutory property tax rates decline as the value of property rises.

Question 13

In economics, the "public sector" refers to the

Accepted Answer

A) general public. 
B) consuming public as well as businesses. 
C) federal, state, and local government. 
D) publicly owned corporations. 
A) general public. 
B) consuming public as well as businesses. 
C) federal, state, and local government. 
D) publicly owned corporations.

Question 14

Other things being equal, the burden of a sales tax on a product will be borne entirely by the producer if

Accepted Answer

A) demand is perfectly elastic. 
B) supply is perfectly elastic. 
C) supply and demand have the same price elasticity. 
D) demand is perfectly inelastic. 
A) demand is perfectly elastic. 
B) supply is perfectly elastic. 
C) supply and demand have the same price elasticity. 
D) demand is perfectly inelastic.

Question 15

(Advanced analysis)The equations for the demand and supply curves for a particular product are P = 10 − 0.4 Q and P = 2 + 0.4 Q, 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 + 0.4 Q. 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 16

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

Accepted Answer

A) True 
 B)False

Question 17

(Advanced analysis)The equations for the demand and supply curves for a particular product are P = 10 − 0.4 Q and P = 1 + 0.4 Q, 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 = 2 + 0.4 Q. The efficiency loss of this tax is

Accepted Answer

A) $62.50. 
B) $125. 
C) $87.50. 
D) $1.00. 
A) $62.50. 
B) $125. 
C) $87.50. 
D) $1.00.

Question 18

Total governmental purchases-federal, state, and local combined-accounted for about what percentage of domestic output in 2018?

Accepted Answer

A) 32 percent 
B) 18 percent 
C) 14 percent 
D) 5 percent 
A) 32 percent 
B) 18 percent 
C) 14 percent 
D) 5 percent

Question 19

Which of the following is the largest expenditure item of local governments?

Accepted Answer

A) highways 
B) welfare 
C) education 
D) public safety 
A) highways 
B) welfare 
C) education 
D) public safety

Question 20

Describe how the federal government functions within the circular flow model.

Accepted Answer

Government buys products from the produc

Exam 20: Public Finance: Expenditures and Taxes

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

Using income as the tax base, which of the following best illustrates a regressive tax?

The largest portion of federal employees work in the national defense sector.

The efficiency loss of a tax is the idea that

The table contains five tax schedules for an economy. All figures are in billions of dollars. Which of the schedules represent(s)a progressive tax?

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

The tax revenues of local governments are typically

A tax is regressive if it

The addition of government to the circular-flow model illustrates that government

Which of the following is not an important source of revenue for the federal government?

The table represents a personal income tax schedule. The average tax rate at the $60,000 level of income is

The property tax may be regressive even though wealthy people own much more taxable property than do poor people. This possibility arises because

In economics, the "public sector" refers to the

Other things being equal, the burden of a sales tax on a product will be borne entirely by the producer if

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

Total governmental purchases-federal, state, and local combined-accounted for about what percentage of domestic output in 2018?

Which of the following is the largest expenditure item of local governments?

Describe how the federal government functions within the circular flow model.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, 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

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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