Question 1

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

Accepted Answer

A) A 
B) B 
C) C 
D) none of the schedules 
A) A 
B) B 
C) C 
D) none of the schedules

Question 2

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 3

In the diagram, solid arrows reflect real flows, while broken arrows are monetary flows. Flow (8)might represent

Accepted Answer

A) personal income taxes. 
B) automobile purchases by the state of Maine. 
C) the services of firefighters. 
D) subsidies to farmers. 
A) personal income taxes. 
B) automobile purchases by the state of Maine. 
C) the services of firefighters. 
D) subsidies to farmers.

Question 4

From 1960 to 2018, 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 5

The graph shows the supply curve for a product before tax ( S ₀ )and after an excise tax is imposed ( S ₁). If 500 units of the product are sold after the tax is imposed, the amount of the tax borne by the consumer is

Accepted Answer

A) $125. 
B) $250. 
C) $375. 
D) $500. 
A) $125. 
B) $250. 
C) $375. 
D) $500.

Question 6

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.

Question 7

What is a regressive tax? Explain why payroll taxes are regressive.

Accepted Answer

A regressive tax is a tax whose average

Question 8

If everyone pays a fixed dollar amount of tax, then the tax is a

Accepted Answer

A) proportional tax. 
B) regressive tax. 
C) personal tax. 
D) marginal tax. 
A) proportional tax. 
B) regressive tax. 
C) personal tax. 
D) marginal tax.

Question 9

A tax that takes a larger proportion of income from low-income groups than from high-income groups is a

Accepted Answer

A) stabilizing tax. 
B) regressive tax. 
C) progressive tax. 
D) proportional tax. 
A) stabilizing tax. 
B) regressive tax. 
C) progressive tax. 
D) proportional tax.

Question 10

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 11

(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 efficiency loss of this tax is

Accepted Answer

A) $62.5. 
B) $125. 
C) $87.5. 
D) $1. 
A) $62.5. 
B) $125. 
C) $87.5. 
D) $1.

Question 12

What are the problems encountered in a strict application of the benefits-received principle of taxation?

Accepted Answer

The benefits-received principle asserts

Question 13

A nation's "tax burden" is measured by the

Accepted Answer

A) total amount of tax dollars paid by the citizens. 
B) average tax rate on taxable income in the nation. 
C) government's tax revenues as a percentage of GDP. 
D) average of personal-income and corporate-income tax rates. 
A) total amount of tax dollars paid by the citizens. 
B) average tax rate on taxable income in the nation. 
C) government's tax revenues as a percentage of GDP. 
D) average of personal-income and corporate-income tax rates.

Question 14

Sales and excise taxes are levied on retailers, but retailers add these taxes to the prices of their products. This illustrates the

Accepted Answer

A) equal sacrifice theory of taxation. 
B) shifting of taxes to consumers. 
C) ability-to-pay principle of taxation. 
D) benefits-received principle of taxation. 
A) equal sacrifice theory of taxation. 
B) shifting of taxes to consumers. 
C) ability-to-pay principle of taxation. 
D) benefits-received principle of taxation.

Question 15

Corporate income taxes contribute more to federal tax revenues than do personal income taxes.

Accepted Answer

A) True 
 B)False

Question 16

Compare the progressivity of the U.S. tax system to that of other OECD countries.

Accepted Answer

A study by the Organization for Economic

Question 17

Many states in the U.S. acquire significant amounts of funds from the following, except

Accepted Answer

A) state-run lotteries. 
B) grants from the federal government. 
C) personal income taxes. 
D) property taxes. 
A) state-run lotteries. 
B) grants from the federal government. 
C) personal income taxes. 
D) property taxes.

Question 18

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 19

In 2017, 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 20

Government purchases and transfer payments

Accepted Answer

A) differ because the latter absorb resources while the former do not. 
B) differ because the former absorb resources while the latter do not. 
C) are alike because both are more inflationary than private spending. 
D) are alike because both absorb resources. 
A) differ because the latter absorb resources while the former do not. 
B) differ because the former absorb resources while the latter do not. 
C) are alike because both are more inflationary than private spending. 
D) are alike because both absorb resources.

Exam 20: Public Finance: Expenditures and Taxes

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

The more inelastic are demand and supply, the

In the diagram, solid arrows reflect real flows, while broken arrows are monetary flows. Flow (8)might represent

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

The graph shows the supply curve for a product before tax ( S ₀ )and after an excise tax is imposed ( S ₁). If 500 units of the product are sold after the tax is imposed, the amount of the tax borne by the consumer is

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

What is a regressive tax? Explain why payroll taxes are regressive.

If everyone pays a fixed dollar amount of tax, then the tax is a

A tax that takes a larger proportion of income from low-income groups than from high-income groups is a

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.

What are the problems encountered in a strict application of the benefits-received principle of taxation?

A nation's "tax burden" is measured by the

Sales and excise taxes are levied on retailers, but retailers add these taxes to the prices of their products. This illustrates the

Corporate income taxes contribute more to federal tax revenues than do personal income taxes.

Compare the progressivity of the U.S. tax system to that of other OECD countries.

Many states in the U.S. acquire significant amounts of funds from the following, except

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

In 2017, 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?

Government purchases and transfer payments

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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