Question 1

Exhibit 12-4 Marginal tax rate lines   In Exhibit 12-4, line A represents a(n):

Accepted Answer

A) regressive tax. 
B) progressive tax. 
C) proportional tax. 
D) ability-to-pay tax. 
A) regressive tax. 
B) progressive tax. 
C) proportional tax. 
D) ability-to-pay tax.

Question 2

Since the 1950s, total expenditures in the United States nearly tripled to about 60 percent of GDP.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following represents the basic principle of public choice theory?

Accepted Answer

A) Politicians act consistently in the public's interest. 
B) Politicians follow their own self-interest and seek to maximize their reelection chances, rather than promote the best interests of society. 
C) Politicians act in the public interest once they are elected, but follow their own self-interest and seek to maximize their reelection chances during a political campaign. 
D) None of the above answers are correct. 
A) Politicians act consistently in the public's interest. 
B) Politicians follow their own self-interest and seek to maximize their reelection chances, rather than promote the best interests of society. 
C) Politicians act in the public interest once they are elected, but follow their own self-interest and seek to maximize their reelection chances during a political campaign. 
D) None of the above answers are correct.

Question 4

Suppose fairness is defined as those with the highest incomes can afford to pay a greater proportion of their income in taxes. Then which of the following taxation systems would be consistent with this notion of fairness?

Accepted Answer

A) A true flax tax. 
B) A flat sales tax on consumption purchases. 
C) A progressive tax on income. 
D) A fixed federal tax of $5,000 that everyone pays regardless of income status. 
A) A true flax tax. 
B) A flat sales tax on consumption purchases. 
C) A progressive tax on income. 
D) A fixed federal tax of $5,000 that everyone pays regardless of income status.

Question 5

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

Accepted Answer

A) Property tax. 
B) Progressive income tax. 
C) Excise tax on gasoline. 
D) Excise tax on cigarettes. 
A) Property tax. 
B) Progressive income tax. 
C) Excise tax on gasoline. 
D) Excise tax on cigarettes.

Question 6

Describe the two basic philosophies of taxation fairness.

Accepted Answer

The two basic philosophies of taxation f

Question 7

Currently, total government expenditures in the United States:

Accepted Answer

A) are close to 40 percent of GDP. 
B) fell by half, to 10 percent of GDP. 
C) nearly doubled to one half of GDP. 
D) nearly tripled to about 60 percent of GDP. 
A) are close to 40 percent of GDP. 
B) fell by half, to 10 percent of GDP. 
C) nearly doubled to one half of GDP. 
D) nearly tripled to about 60 percent of GDP.

Question 8

A problem with the income security program category for federal government outlays is that it excludes unemployment compensation.

Accepted Answer

A) True 
 B)False

Question 9

Currently, total private sector expenditures in the United States:

Accepted Answer

A) remained close to one third of GDP. 
B) fell by half to 50 percent of GDP. 
C) fell by half to 65 percent of GDP. 
D) remained close to 60 percent of GDP. 
A) remained close to one third of GDP. 
B) fell by half to 50 percent of GDP. 
C) fell by half to 65 percent of GDP. 
D) remained close to 60 percent of GDP.

Question 10

When the tax rate is constant when a person's income rises, the tax is a:

Accepted Answer

A) regressive tax. 
B) poll tax. 
C) progressive tax. 
D) constant tax. 
E) proportional tax. 
A) regressive tax. 
B) poll tax. 
C) progressive tax. 
D) constant tax. 
E) proportional tax.

Question 11

A tax system in which the tax rate on everyone's first $10,000 of income is 10 percent, the tax rate on everyone's second $10,000 of income is 15 percent, and the tax rate on all income over $20,000 is 25 percent is a(n):

Accepted Answer

A) proportional tax. 
B) equitable tax. 
C) head tax. 
D) unit tax. 
E) progressive tax. 
A) proportional tax. 
B) equitable tax. 
C) head tax. 
D) unit tax. 
E) progressive tax.

Question 12

The benefits-received principle of taxation is most evident in:

Accepted Answer

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

Question 13

State and local sales taxes are typically progressive.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following countries devote the smallest percentage of its GDP to taxes?

Accepted Answer

A) The United Kingdom. 
B) Sweden. 
C) Germany. 
D) The United States. 
A) The United Kingdom. 
B) Sweden. 
C) Germany. 
D) The United States.

Question 15

Which of the following statements is false ?

Accepted Answer

A) The largest source of state and local governments tax revenue is sales and excise taxes. 
B) The largest source of federal government tax revenue is individual income taxes. 
C) A sales tax on food is a regressive tax. 
D) A proportional tax is equal to a fixed dollar amount. 
A) The largest source of state and local governments tax revenue is sales and excise taxes. 
B) The largest source of federal government tax revenue is individual income taxes. 
C) A sales tax on food is a regressive tax. 
D) A proportional tax is equal to a fixed dollar amount.

Question 16

A tax where wealthy people pay a larger percentage of their income than poor people is known as a(n):

Accepted Answer

A) excise tax. 
B) flat tax. 
C) proportional tax. 
D) progressive tax. 
E) regressive tax. 
A) excise tax. 
B) flat tax. 
C) proportional tax. 
D) progressive tax. 
E) regressive tax.

Question 17

"It would be an undue hardship to require people whose income is below $15,000 per year to pay income taxes." This statement reflects which of the following principles for a tax?

Accepted Answer

A) Benefits-received. 
B) Inexpensive-to-collect. 
C) Ability-to-pay. 
D) Fairness of contribution. 
A) Benefits-received. 
B) Inexpensive-to-collect. 
C) Ability-to-pay. 
D) Fairness of contribution.

Question 18

Since World War II, most of the growth in U.S. government outlays is attributable to rapidly growing federal government transfer programs.

Accepted Answer

A) True 
 B)False

Question 19

Cost-benefit principles can be applied to the decision of:

Accepted Answer

A) profit-maximizing firms. 
B) majority-rule voting. 
C) which project receives the most votes. 
D) rational ignorance. 
E) all of these. 
A) profit-maximizing firms. 
B) majority-rule voting. 
C) which project receives the most votes. 
D) rational ignorance. 
E) all of these.

Question 20

"He who pays a tax should receive the benefit from the expenditure financed by the tax." This statement reflects which of the following principles for a tax?

Accepted Answer

A) Fairness of contribution. 
B) Ability-to-pay. 
C) Benefits-received. 
D) Inexperience-to-collect. 
A) Fairness of contribution. 
B) Ability-to-pay. 
C) Benefits-received. 
D) Inexperience-to-collect.

Exam 12: The Public Sector

Exhibit 12-4 Marginal tax rate lines In Exhibit 12-4, line A represents a(n):

Since the 1950s, total expenditures in the United States nearly tripled to about 60 percent of GDP.

Which of the following represents the basic principle of public choice theory?

Suppose fairness is defined as those with the highest incomes can afford to pay a greater proportion of their income in taxes. Then which of the following taxation systems would be consistent with this notion of fairness?

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

Describe the two basic philosophies of taxation fairness.

Currently, total government expenditures in the United States:

A problem with the income security program category for federal government outlays is that it excludes unemployment compensation.

Currently, total private sector expenditures in the United States:

When the tax rate is constant when a person's income rises, the tax is a:

A tax system in which the tax rate on everyone's first $10,000 of income is 10 percent, the tax rate on everyone's second $10,000 of income is 15 percent, and the tax rate on all income over $20,000 is 25 percent is a(n):

The benefits-received principle of taxation is most evident in:

State and local sales taxes are typically progressive.

Which of the following countries devote the smallest percentage of its GDP to taxes?

Which of the following statements is false ?

A tax where wealthy people pay a larger percentage of their income than poor people is known as a(n):

"It would be an undue hardship to require people whose income is below $15,000 per year to pay income taxes." This statement reflects which of the following principles for a tax?

Since World War II, most of the growth in U.S. government outlays is attributable to rapidly growing federal government transfer programs.

Cost-benefit principles can be applied to the decision of:

"He who pays a tax should receive the benefit from the expenditure financed by the tax." This statement reflects which of the following principles for a tax?

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Applying Graphs to Economics

Consumer Surplus, Producer Surplus, and Market Efficiency

the Self-Correcting Aggregate Demand and Supply Model

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

Filters