Question 1

The notion that equally situated individuals should be taxed equally is referred to as

Accepted Answer

A) horizontal equity. 
B) vertical equity. 
C) the benefits principle. 
D) the Gini principle. 
A) horizontal equity. 
B) vertical equity. 
C) the benefits principle. 
D) the Gini principle.

Question 2

Indirect taxes are levied on specific economic activities.

Accepted Answer

A) True 
 B)False

Question 3

The payroll tax receipts

Accepted Answer

A) are used to reduce the national debt. 
B) are invested in private business for future payments. 
C) pay off current recipients of Social Security payments. 
D) go directly into a trust fund for investment in private businesses. 
A) are used to reduce the national debt. 
B) are invested in private business for future payments. 
C) pay off current recipients of Social Security payments. 
D) go directly into a trust fund for investment in private businesses.

Question 4

For about the last 45 years, federal taxes have remained relatively constant as a percentage of GDP.

Accepted Answer

A) True 
 B)False

Question 5

Figure 18-1
  
-According to the graph in Figure 18-1, the tax is which of the following?

Accepted Answer

A) 400 
B) 600 
C) 1,000 
D) 200 
A) 400 
B) 600 
C) 1,000 
D) 200

Question 6

Corporate taxes are a direct tax.

Accepted Answer

A) True 
 B)False

Question 7

Since World War II, the share of corporate income tax collections in total federal revenue has been:

Accepted Answer

A) increasing rapidly. 
B) declining rapidly. 
C) increasing slowly. 
D) declining generally. 
A) increasing rapidly. 
B) declining rapidly. 
C) increasing slowly. 
D) declining generally.

Question 8

Figure 18-2
  
-Figure 18-2 shows the widget market before and after an excise tax is imposed.After the tax is imposed, the amount that a firm keeps for itself from the sale of each widget is ____.

Accepted Answer

A) $95 
B) $100 
C) $120 
D) $125 
A) $95 
B) $100 
C) $120 
D) $125

Question 9

Direct taxes are levied on specific economic activities.

Accepted Answer

A) True 
 B)False

Question 10

The authors of the text suggest that a comprehensive personal income tax with few loopholes would be efficient and equitable.What is their reasoning for this statement?

Accepted Answer

They argue that a personal income tax wi

Question 11

How is state and local government funded and how does such funding differ from federal government funding?

Accepted Answer

State and local governments rely heavily

Question 12

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 13

The Social Security system in the United States today is

Accepted Answer

A) actuarially sound. 
B) composed of a private pension fund into which workers have paid and who will withdraw their invested funds upon retirement. 
C) currently in no danger of running out of money in the long run. 
D) no longer a "pay as you go" system. 
A) actuarially sound. 
B) composed of a private pension fund into which workers have paid and who will withdraw their invested funds upon retirement. 
C) currently in no danger of running out of money in the long run. 
D) no longer a "pay as you go" system.

Question 14

When taxes alter individual behavior as people attempt to avoid the tax, efficiency

Accepted Answer

A) losses are probable. 
B) gains are possible. 
C) gains are impossible. 
D) losses are impossible. 
A) losses are probable. 
B) gains are possible. 
C) gains are impossible. 
D) losses are impossible.

Question 15

"Those most able should pay the highest taxes" reflects the

Accepted Answer

A) ability-to-pay principle. 
B) concept of horizontal equity. 
C) idea of fiscal federalism. 
D) benefits principle. 
A) ability-to-pay principle. 
B) concept of horizontal equity. 
C) idea of fiscal federalism. 
D) benefits principle.

Question 16

The incidence of a payroll tax is borne by both employers and employees.

Accepted Answer

A) True 
 B)False

Question 17

If a tax is proportional, the average tax rate

Accepted Answer

A) remains the same as income rises. 
B) rises as income rises. 
C) falls as income rises. 
D) falls as income falls. 
A) remains the same as income rises. 
B) rises as income rises. 
C) falls as income rises. 
D) falls as income falls.

Question 18

Explain the excess burden of a tax on luxury yachts.

Accepted Answer

A tax on luxury yachts, say of $1,000, w

Question 19

Tax loopholes

Accepted Answer

A) reduce the progressivity of the federal income tax. 
B) encourage particular patterns of behavior. 
C) include exemption of interest earned on municipal bonds. 
D) All of the above are correct. 
A) reduce the progressivity of the federal income tax. 
B) encourage particular patterns of behavior. 
C) include exemption of interest earned on municipal bonds. 
D) All of the above are correct.

Question 20

Figure 18-2
  
-Figure 18-2 shows the widget market before and after an excise tax is imposed.The revenue collected by the tax is ____.

Accepted Answer

A) $8,000 
B) $50,000 
C) $100,000 
D) $150,000 
A) $8,000 
B) $50,000 
C) $100,000 
D) $150,000

Exam 17: Taxation and Resource Allocation

The notion that equally situated individuals should be taxed equally is referred to as

Indirect taxes are levied on specific economic activities.

The payroll tax receipts

For about the last 45 years, federal taxes have remained relatively constant as a percentage of GDP.

Figure 18-1 -According to the graph in Figure 18-1, the tax is which of the following?

Corporate taxes are a direct tax.

Since World War II, the share of corporate income tax collections in total federal revenue has been:

Figure 18-2 -Figure 18-2 shows the widget market before and after an excise tax is imposed.After the tax is imposed, the amount that a firm keeps for itself from the sale of each widget is ____.

Direct taxes are levied on specific economic activities.

The authors of the text suggest that a comprehensive personal income tax with few loopholes would be efficient and equitable.What is their reasoning for this statement?

How is state and local government funded and how does such funding differ from federal government funding?

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

The Social Security system in the United States today is

When taxes alter individual behavior as people attempt to avoid the tax, efficiency

"Those most able should pay the highest taxes" reflects the

The incidence of a payroll tax is borne by both employers and employees.

If a tax is proportional, the average tax rate

Explain the excess burden of a tax on luxury yachts.

Tax loopholes

Figure 18-2 -Figure 18-2 shows the widget market before and after an excise tax is imposed.The revenue collected by the tax is ____.

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

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Filters