Question 1

A tax that is structured so that people pay the same percentage of their income in taxes is called a(n):

Accepted Answer

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

Question 2

Measured as a share of the economy, total government expenditures:

Accepted Answer

A)  have been between 10 and 15 percent of the U.S. economy since 1930. 
B)  have been between 20 and 25 percent of the U.S. economy since 1930. 
C)  rose from less than 10 percent in 1929 to about 35 percent currently. 
D)  declined from more than 50 percent in 1929 to approximately 25 percent currently. 
A)  have been between 10 and 15 percent of the U.S. economy since 1930. 
B)  have been between 20 and 25 percent of the U.S. economy since 1930. 
C)  rose from less than 10 percent in 1929 to about 35 percent currently. 
D)  declined from more than 50 percent in 1929 to approximately 25 percent currently.

Question 3

Which of the following statements is true ?

Accepted Answer

A)  Sales, excise, and flat-rate taxes violate the ability-to-pay principle of taxation fairness because each results in a smaller burden on the poor than the rich. 
B)  Government failure may occur if voters are rationally ignorant. 
C)  Special-interest group political pressure results only from programs for which benefits outweigh costs. 
D)  Majority-rule voting and benefit-cost analysis result in the same projects being undertaken. 
A)  Sales, excise, and flat-rate taxes violate the ability-to-pay principle of taxation fairness because each results in a smaller burden on the poor than the rich. 
B)  Government failure may occur if voters are rationally ignorant. 
C)  Special-interest group political pressure results only from programs for which benefits outweigh costs. 
D)  Majority-rule voting and benefit-cost analysis result in the same projects being undertaken.

Question 4

At the federal level, the single most important tax, accounting for slightly less than half of revenue, is the:

Accepted Answer

A)  corporate income tax. 
B)  personal income tax. 
C)  sales tax. 
D)  property tax. 
A)  corporate income tax. 
B)  personal income tax. 
C)  sales tax. 
D)  property tax.

Question 5

Describe the two basic philosophies of taxation fairness.

Accepted Answer

The two basic philosophies of taxation f

Question 6

Voters may choose to remain uninformed about an issue because of:

Accepted Answer

A)  the special-interest effect. 
B)  rational ignorance. 
C)  bureaucratic inefficiency. 
D)  the shortsightedness effect. 
A)  the special-interest effect. 
B)  rational ignorance. 
C)  bureaucratic inefficiency. 
D)  the shortsightedness effect.

Question 7

The burden of taxation in the United States

Accepted Answer

A)  from federal government taxes is smaller than the burden from state and local government taxes. 
B)  has increased since 1929. 
C)  has decreased since 1929. 
D)  from state and local government taxes has increased, while the burden from federal taxes has decreased. 
A)  from federal government taxes is smaller than the burden from state and local government taxes. 
B)  has increased since 1929. 
C)  has decreased since 1929. 
D)  from state and local government taxes has increased, while the burden from federal taxes has decreased.

Question 8

Since 1929, total government taxes as a percentage of GDP:

Accepted Answer

A)  climbed from 10 percent to about 30 percent. 
B)  remained close to 30 percent. 
C)  climbed from 30 percent to about 50 percent. 
D)  climbed from 15 percent to about 50 percent. 
A)  climbed from 10 percent to about 30 percent. 
B)  remained close to 30 percent. 
C)  climbed from 30 percent to about 50 percent. 
D)  climbed from 15 percent to about 50 percent.

Question 9

Exhibit 12-1 Income for two persons
 
In Exhibit 12-1, if the income tax system is proportional, then:

Accepted Answer

A)  Elaine and Daniel will face the same tax rate and will have tax bills the same size. 
B)  Elaine and Daniel will face the same tax rate but Elaine's tax bill will be larger. 
C)  Elaine will face a higher tax rate and will have a larger tax bill than Daniel. 
D)  Elaine will face a lower tax rate and will have a smaller tax bill than Daniel. 
A)  Elaine and Daniel will face the same tax rate and will have tax bills the same size. 
B)  Elaine and Daniel will face the same tax rate but Elaine's tax bill will be larger. 
C)  Elaine will face a higher tax rate and will have a larger tax bill than Daniel. 
D)  Elaine will face a lower tax rate and will have a smaller tax bill than Daniel.

Question 10

If a person is concerned that an additional $1,000 income will move him/her into a new tax bracket, that person is worried about the:

Accepted Answer

A)  proportional rate. 
B)  regressive tax rate. 
C)  marginal tax rate. 
D)  flat tax rate. 
A)  proportional rate. 
B)  regressive tax rate. 
C)  marginal tax rate. 
D)  flat tax rate.

Question 11

A tax where the percentage of income paid in taxes is the same regardless of the size of the income is a:

Accepted Answer

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

Question 12

Government expenditures as a share of the U.S. economy are:

Accepted Answer

A)  the largest in the world. 
B)  the smallest in the world. 
C)  smaller than most Western European countries. 
D)  larger than Canada, France, and the United Kingdom but slightly smaller than Germany and Italy. 
A)  the largest in the world. 
B)  the smallest in the world. 
C)  smaller than most Western European countries. 
D)  larger than Canada, France, and the United Kingdom but slightly smaller than Germany and Italy.

Question 13

When the tax structure of a nation is progressive, as incomes increase, the tax rate:

Accepted Answer

A)  declines. 
B)  remains the same. 
C)  increases. 
D)  is proportional. 
A)  declines. 
B)  remains the same. 
C)  increases. 
D)  is proportional.

Question 14

"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)  efficiency 
A)  fairness of contribution 
B)  ability-to-pay 
C)  benefits-received 
D)  efficiency

Question 15

Government expenditures are different from the government national income account (G) in that:

Accepted Answer

A)  government expenditures includes transfer payments while G does not. 
B)  government expenditures are net of tax revenue while G is not. 
C)  G includes transfer payments while government expenditures does not. 
D)  G includes spending for defense, highways, and education while government expenditures does not. 
A)  government expenditures includes transfer payments while G does not. 
B)  government expenditures are net of tax revenue while G is not. 
C)  G includes transfer payments while government expenditures does not. 
D)  G includes spending for defense, highways, and education while government expenditures does not.

Question 16

Describe the major sources of tax revenue and expenditures for the federal government.

Accepted Answer

The major source of tax revenu

Question 17

What are the public choice theory arguments against government involvement in the economy?

Accepted Answer

Public choice theory emphasizes the poss

Question 18

Consider two people, Sandy Ross, who earns $25,000, and Gary Belcher, who earns $50,000. If the flat-tax rate is 20 percent, then:

Accepted Answer

A)  the government collects a total of $20,000. 
B)  Gary pays twice the tax amount Sandy pays. 
C)  Gary pays three times the tax amount Sandy pays. 
D)  Gary and Sandy pay exactly the same tax amount. 
A)  the government collects a total of $20,000. 
B)  Gary pays twice the tax amount Sandy pays. 
C)  Gary pays three times the tax amount Sandy pays. 
D)  Gary and Sandy pay exactly the same tax amount.

Question 19

Total government spending (federal, state, and local) sums to approximately:

Accepted Answer

A)  10 percent of the U.S. economy. 
B)  20 percent of the U.S. economy. 
C)  40 percent of the U.S. economy. 
D)  one-half of the U.S. economy. 
A)  10 percent of the U.S. economy. 
B)  20 percent of the U.S. economy. 
C)  40 percent of the U.S. economy. 
D)  one-half of the U.S. economy.

Question 20

Which of the following statements best describes government expenditure patterns?

Accepted Answer

A)  The government's share of total economic activity has generally decreased since 1950. 
B)  Most of the growth in government expenditures as a percentage of GDP is due to rapidly growing federal government transfer programs. 
C)  Government expenditure as a share of GDP has fluctuated wildly depending on which political party is in control. 
D)  Most of the growth in government expenditures as a percentage of GDP is due to rapidly growing national defense programs. 
A)  The government's share of total economic activity has generally decreased since 1950. 
B)  Most of the growth in government expenditures as a percentage of GDP is due to rapidly growing federal government transfer programs. 
C)  Government expenditure as a share of GDP has fluctuated wildly depending on which political party is in control. 
D)  Most of the growth in government expenditures as a percentage of GDP is due to rapidly growing national defense programs.

Exam 22: The Public Sector

A tax that is structured so that people pay the same percentage of their income in taxes is called a(n):

Measured as a share of the economy, total government expenditures:

Which of the following statements is true ?

At the federal level, the single most important tax, accounting for slightly less than half of revenue, is the:

Describe the two basic philosophies of taxation fairness.

Voters may choose to remain uninformed about an issue because of:

The burden of taxation in the United States

Since 1929, total government taxes as a percentage of GDP:

Exhibit 12-1 Income for two persons In Exhibit 12-1, if the income tax system is proportional, then:

If a person is concerned that an additional $1,000 income will move him/her into a new tax bracket, that person is worried about the:

A tax where the percentage of income paid in taxes is the same regardless of the size of the income is a:

Government expenditures as a share of the U.S. economy are:

When the tax structure of a nation is progressive, as incomes increase, the tax rate:

"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?

Government expenditures are different from the government national income account (G) in that:

Describe the major sources of tax revenue and expenditures for the federal government.

What are the public choice theory arguments against government involvement in the economy?

Consider two people, Sandy Ross, who earns $25,000, and Gary Belcher, who earns $50,000. If the flat-tax rate is 20 percent, then:

Total government spending (federal, state, and local) sums to approximately:

Which of the following statements best describes government expenditure patterns?

Introducing the Economic Way of Thinking

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution Poverty and Discrimination

Antitrust and Regulation

Environmental Economics

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

Understanding Direct and Inverse Relationships between Variables

Filters