Question 1

Taxes on sales of liquor, tobacco, and tires are examples of

Accepted Answer

A) direct taxes. 
B) excise taxes. 
C) progressive taxation. 
D) loopholes. 
A) direct taxes. 
B) excise taxes. 
C) progressive taxation. 
D) loopholes.

Question 2

What is the controversy surrounding property taxes as a source for school funding?

Accepted Answer

The controversy behind school funding ap

Question 3

Officially, the payroll tax is referred to as

Accepted Answer

A) the trust fund tax. 
B) Social Security tax. 
C) contributions for social insurance. 
D) investment in Social Security. 
A) the trust fund tax. 
B) Social Security tax. 
C) contributions for social insurance. 
D) investment in Social Security.

Question 4

In the area of taxation, the trade-off between equity and efficiency

Accepted Answer

A) never occurs since efficient taxes are often the most progressive. 
B) is relevant as efficient taxes are often regressive. 
C) is irrelevant. 
D) is relevant because efficient taxes are often progressive. 
A) never occurs since efficient taxes are often the most progressive. 
B) is relevant as efficient taxes are often regressive. 
C) is irrelevant. 
D) is relevant because efficient taxes are often progressive.

Question 5

What are the arguments for and against federal government grants to states?

Accepted Answer

Supporters of large grants see state gov

Question 6

Explain the purpose of payroll taxes. Is it a proportional form of tax?

Accepted Answer

The payroll tax is a tax levied on the e

Question 7

If the demand curve for a product is vertical, then

Accepted Answer

A) consumers will refuse to bear any share of tax burden. 
B) producers will bear the larger share of the tax burden. 
C) consumers will bear the entire tax burden. 
D) producers and consumers will equally share the tax burden. 
A) consumers will refuse to bear any share of tax burden. 
B) producers will bear the larger share of the tax burden. 
C) consumers will bear the entire tax burden. 
D) producers and consumers will equally share the tax burden.

Question 8

A tax that creates an excess burden may nevertheless improve efficiency if

Accepted Answer

A) consumption of the good has been generating beneficial externalities. 
B) consumption of the good has been generating no externalities. 
C) consumption of the good has been generating detrimental externalities. 
D) the good has been supplied by a monopolist. 
A) consumption of the good has been generating beneficial externalities. 
B) consumption of the good has been generating no externalities. 
C) consumption of the good has been generating detrimental externalities. 
D) the good has been supplied by a monopolist.

Question 9

Members of the European Union (EU), rely heavily on this form of indirect taxes.

Accepted Answer

A) Value-added tax 
B) Excise tax 
C) Property tax 
D) Sales tax 
A) Value-added tax 
B) Excise tax 
C) Property tax 
D) Sales tax

Question 10

Describe the U.S. Social Security system and explain how it is funded.

Accepted Answer

Originally created as a trust fund syste

Question 11

If two families are identical with respect to size, income, general expenses, etc., and are taxed equally, we say that there is

Accepted Answer

A) horizontal equity. 
B) vertical equity. 
C) observance of the ability-to-pay principle. 
D) intergenerational equity. 
A) horizontal equity. 
B) vertical equity. 
C) observance of the ability-to-pay principle. 
D) intergenerational equity.

Question 12

States rely primarily on income taxes as a source of revenue.

Accepted Answer

A) True 
 B)False

Question 13

Vertical equity in income taxation refers to the notion that persons with different levels of income should be taxed differently.

Accepted Answer

A) True 
 B)False

Question 14

Federal, state, and local taxes

Accepted Answer

A) have been falling as a share of GDP since the 1970s. 
B) have been increasing as a share of GDP since the 1970s. 
C) are about a quarter of GDP. 
D) are about one-third of GDP. 
A) have been falling as a share of GDP since the 1970s. 
B) have been increasing as a share of GDP since the 1970s. 
C) are about a quarter of GDP. 
D) are about one-third of GDP.

Question 15

The payroll tax is a direct tax.

Accepted Answer

A) True 
 B)False

Question 16

The total burden of a tax is the

Accepted Answer

A) absolute number of dollars an individual pays. 
B) percentage of income a person pays. 
C) number of dollars a person must be given after taxation to make him as well off as he was before taxation. 
D) revenue lost to loopholes. 
A) absolute number of dollars an individual pays. 
B) percentage of income a person pays. 
C) number of dollars a person must be given after taxation to make him as well off as he was before taxation. 
D) revenue lost to loopholes.

Question 17

In England, the Thatcher government substituted a "poll tax" for the local property tax. People took strong exception to the tax, which is basically a head or "lump sum" tax. The principle of taxation such a tax violates is called

Accepted Answer

A) the benefits principle. 
B) the excess burden principle. 
C) the ability-to-pay principle. 
D) the constitutional principle. 
A) the benefits principle. 
B) the excess burden principle. 
C) the ability-to-pay principle. 
D) the constitutional principle.

Question 18

Corporate taxes are a direct tax.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not true about the tax exemptions on interest from municipal bonds?

Accepted Answer

A) It is a tax loophole. 
B) It reduces excess tax burden. 
C) It helps the wealthy the most. 
D) It makes the tax system less progressive. 
A) It is a tax loophole. 
B) It reduces excess tax burden. 
C) It helps the wealthy the most. 
D) It makes the tax system less progressive.

Question 20

State personal income taxes are

Accepted Answer

A) payroll taxes. 
B) excise taxes. 
C) direct taxes. 
D) indirect taxes. 
A) payroll taxes. 
B) excise taxes. 
C) direct taxes. 
D) indirect taxes.

Exam 17: Taxation and Resource Allocation

Taxes on sales of liquor, tobacco, and tires are examples of

What is the controversy surrounding property taxes as a source for school funding?

Officially, the payroll tax is referred to as

In the area of taxation, the trade-off between equity and efficiency

What are the arguments for and against federal government grants to states?

Explain the purpose of payroll taxes. Is it a proportional form of tax?

If the demand curve for a product is vertical, then

A tax that creates an excess burden may nevertheless improve efficiency if

Members of the European Union (EU), rely heavily on this form of indirect taxes.

Describe the U.S. Social Security system and explain how it is funded.

If two families are identical with respect to size, income, general expenses, etc., and are taxed equally, we say that there is

States rely primarily on income taxes as a source of revenue.

Vertical equity in income taxation refers to the notion that persons with different levels of income should be taxed differently.

Federal, state, and local taxes

The payroll tax is a direct tax.

The total burden of a tax is the

In England, the Thatcher government substituted a "poll tax" for the local property tax. People took strong exception to the tax, which is basically a head or "lump sum" tax. The principle of taxation such a tax violates is called

Corporate taxes are a direct tax.

Which of the following is not true about the tax exemptions on interest from municipal bonds?

State personal income taxes are

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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