Question 1

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

Accepted Answer

A) V only 
B) III and V 
C) IV only 
D) I only 
A) V only 
B) III and V 
C) IV only 
D) I only

Question 2

Refer to the income tax schedule given in the table. If your taxable income increases from $4,000 to $5,000, you will encounter a marginal tax rate of

Accepted Answer

A) 10 percent. 
B) 15 percent. 
C) 25 percent. 
D) 40 percent. 
A) 10 percent. 
B) 15 percent. 
C) 25 percent. 
D) 40 percent.

Question 3

In 2016, 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 4

Only a few states use state-run lotteries to increase their revenues and pay for expenditures.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is most consistent with the benefits-received principle of taxation?

Accepted Answer

A) A childless couple should not be required to pay taxes for the support of public schools. 
B) Prosperous corporations should pay substantial taxes even if they use few government goods and services. 
C) The best tax is the income tax. 
D) People with high incomes should pay more taxes than people with low incomes. 
A) A childless couple should not be required to pay taxes for the support of public schools. 
B) Prosperous corporations should pay substantial taxes even if they use few government goods and services. 
C) The best tax is the income tax. 
D) People with high incomes should pay more taxes than people with low incomes.

Question 6

Although state and local taxes are highly progressive, federal taxation is predominantly regressive.

Accepted Answer

A) True 
 B)False

Question 7

Refer to the graph. Assume the market for this product is in equilibrium at the intersection of D ₂ and S ₁. The shift in supply from S ₁ to S ₂ is due to an excise tax imposed on the product. How much is the tax per unit of product?

Accepted Answer

A) $2 
B) $3 
C) $4 
D) $6 
A) $2 
B) $3 
C) $4 
D) $6

Question 8

A progressive tax is such that

Accepted Answer

A) tax rates are higher the greater one's income. 
B) the same tax rate applies to all income receivers, so that the rich pay absolutely more taxes than the poor. 
C) entrepreneurial income is exempt from taxation. 
D) the revenues it yields are spent on transfer payments. 
A) tax rates are higher the greater one's income. 
B) the same tax rate applies to all income receivers, so that the rich pay absolutely more taxes than the poor. 
C) entrepreneurial income is exempt from taxation. 
D) the revenues it yields are spent on transfer payments.

Question 9

In the diagram, if box E represents government, box C businesses, and box A households, then flows (11)and (12)would represent

Accepted Answer

A) goods and services. 
B) government expenditures. 
C) resources. 
D) net taxes. 
A) goods and services. 
B) government expenditures. 
C) resources. 
D) net taxes.

Question 10

The table shows four tax schedules for the given base of taxable income. Which of the tax schedules is a progressive tax schedule throughout?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 11

The efficiency loss of a tax is the tax revenue collected by government minus the value of the public goods financed through the tax.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

The table describes the relationship between income and a tax. The tax may be best described as

Accepted Answer

A) regressive at lower income levels and progressive at higher income levels. 
B) regressive at lower income levels and proportional at higher income levels. 
C) proportional at lower income levels and regressive at higher income levels. 
D) proportional at lower income levels and progressive at higher income levels. 
A) regressive at lower income levels and progressive at higher income levels. 
B) regressive at lower income levels and proportional at higher income levels. 
C) proportional at lower income levels and regressive at higher income levels. 
D) proportional at lower income levels and progressive at higher income levels.

Question 14

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 15

Transfer payments are about ____ percent of U.S. domestic output (as of 2018).

Accepted Answer

A) 32 
B) 5 
C) 14 
D) 22 
A) 32 
B) 5 
C) 14 
D) 22

Question 16

From 1960 to 2018, government purchases as a percentage of U.S. output have

Accepted Answer

A) remained approximately constant. 
B) decreased. 
C) increased slightly. 
D) increased sharply. 
A) remained approximately constant. 
B) decreased. 
C) increased slightly. 
D) increased sharply.

Exam 20: Public Finance: Expenditures and Taxes

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

Refer to the income tax schedule given in the table. If your taxable income increases from $4,000 to $5,000, you will encounter a marginal tax rate of

In 2016, the largest portion of federal employees were in which of the following sectors?

Only a few states use state-run lotteries to increase their revenues and pay for expenditures.

Which of the following statements is most consistent with the benefits-received principle of taxation?

Although state and local taxes are highly progressive, federal taxation is predominantly regressive.

Refer to the graph. Assume the market for this product is in equilibrium at the intersection of D ₂ and S ₁. The shift in supply from S ₁ to S ₂ is due to an excise tax imposed on the product. How much is the tax per unit of product?

A progressive tax is such that

In the diagram, if box E represents government, box C businesses, and box A households, then flows (11)and (12)would represent

The table shows four tax schedules for the given base of taxable income. Which of the tax schedules is a progressive tax schedule throughout?

The efficiency loss of a tax is the tax revenue collected by government minus the value of the public goods financed through the tax.

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

The table describes the relationship between income and a tax. The tax may be best described as

The federal tax system is

Transfer payments are about ____ percent of U.S. domestic output (as of 2018).

From 1960 to 2018, government purchases as a percentage of U.S. output have

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