Question 1

Dynamic tax analysis generally predicts

Accepted Answer

A) that the higher the tax rate is, the higher the tax revenue will continue to be into the future. 
B) that the higher tax rates lead to higher revenues only to a point at which revenues will begin to decrease due to a diminishing tax base. 
C) that lower tax rates will always and continuously lead to increased tax revenues. 
D) that lower tax rates are always going to lead to decreased tax revenues. 
A) that the higher the tax rate is, the higher the tax revenue will continue to be into the future. 
B) that the higher tax rates lead to higher revenues only to a point at which revenues will begin to decrease due to a diminishing tax base. 
C) that lower tax rates will always and continuously lead to increased tax revenues. 
D) that lower tax rates are always going to lead to decreased tax revenues.

Question 2

Which of the following is TRUE of an excise tax?

Accepted Answer

A) An excise tax is always a unit tax. 
B) An excise tax is levied on purchases of particular good or service. 
C) An excise tax is based on an individual's income. 
D) Imposing an excise tax shifts the market demand curve. 
A) An excise tax is always a unit tax. 
B) An excise tax is levied on purchases of particular good or service. 
C) An excise tax is based on an individual's income. 
D) Imposing an excise tax shifts the market demand curve.

Question 3

Ultimately, the real burden of paying for Social Security benefits will be paid for by

Accepted Answer

A) taxes levied on workers. 
B) Social Security trust fund bonds. 
C) new federally issued Treasury bills. 
D) a new tax levied on businesses. 
A) taxes levied on workers. 
B) Social Security trust fund bonds. 
C) new federally issued Treasury bills. 
D) a new tax levied on businesses.

Question 4

Should the government wish to lower the price of gasoline to the consumer, one approach might be

Accepted Answer

A) to raise the gasoline excise tax. 
B) to reduce the gasoline excise tax. 
C) to take action to shift the supply curve of gasoline to the left. 
D) to lower taxes on automobiles. 
A) to raise the gasoline excise tax. 
B) to reduce the gasoline excise tax. 
C) to take action to shift the supply curve of gasoline to the left. 
D) to lower taxes on automobiles.

Question 5

-Using the above figure, which of the lines in the above diagram represents a regressive tax?

Accepted Answer

A) A 
B) B 
C) C 
D) none of them 
A) A 
B) B 
C) C 
D) none of them

Question 6

A capital gain results when

Accepted Answer

A) an asset is sold for more than it was purchased. 
B) a debt is settled. 
C) a person purchases a bond. 
D) a person buys gold. 
A) an asset is sold for more than it was purchased. 
B) a debt is settled. 
C) a person purchases a bond. 
D) a person buys gold.

Question 7

Under a progressive income tax system, the marginal income tax rate paid by taxpayers

Accepted Answer

A) declines as their incomes increase. 
B) rises as their incomes increase. 
C) is unchanged as their incomes increase. 
D) is unrelated to their incomes. 
A) declines as their incomes increase. 
B) rises as their incomes increase. 
C) is unchanged as their incomes increase. 
D) is unrelated to their incomes.

Question 8

A sales tax is

Accepted Answer

A) a tax assessed on personal income. 
B) a tax assessed on the prices paid for numerous goods and services. 
C) a tax assessed on a public good. 
D) the total tax base. 
A) a tax assessed on personal income. 
B) a tax assessed on the prices paid for numerous goods and services. 
C) a tax assessed on a public good. 
D) the total tax base.

Question 9

Why is the government budget constraint different between the short run and the long run?

Accepted Answer

In the short run, the government budget

Question 10

The marginal tax rate is

Accepted Answer

A) total tax due/change in taxable income. 
B) total tax due/total taxable income. 
C) change in taxes due/change in taxable income. 
D) change in taxes due/total taxable income. 
A) total tax due/change in taxable income. 
B) total tax due/total taxable income. 
C) change in taxes due/change in taxable income. 
D) change in taxes due/total taxable income.

Question 11

Which of the following statements about excise taxes is TRUE?

Accepted Answer

A) The producer will increase the price of the good by the amount of the excise tax. 
B) The equilibrium price will increase and the equilibrium quantity will remain unchanged. 
C) Both the consumer and producer pay part of the excise tax. 
D) Consumers will refuse to pay excise taxes forcing the producers to pay it. 
A) The producer will increase the price of the good by the amount of the excise tax. 
B) The equilibrium price will increase and the equilibrium quantity will remain unchanged. 
C) Both the consumer and producer pay part of the excise tax. 
D) Consumers will refuse to pay excise taxes forcing the producers to pay it.

Question 12

Which of the following is subject to double taxation?

Accepted Answer

A) income earned by people in the lowest tax bracket 
B) Social Security income 
C) dividends and retained earnings 
D) income earned by government employees 
A) income earned by people in the lowest tax bracket 
B) Social Security income 
C) dividends and retained earnings 
D) income earned by government employees

Question 13

The Social Security tax is considered to be a

Accepted Answer

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

Question 14

-Using the above table, a unit tax of $2 is imposed on the product. The equilibrium price of this product after the tax is imposed is

Accepted Answer

A) $5. 
B) $4. 
C) $3. 
D) $2. 
A) $5. 
B) $4. 
C) $3. 
D) $2.

Question 15

Which of the following statements is TRUE of static tax analysis?

Accepted Answer

A) A government receives lower tax revenues by raising the tax rate. 
B) A government receives higher tax revenues by raising the tax rate. 
C) A government cannot change it tax revenues by changing the tax rate. 
D) A change in the tax rate can raise or lower tax revenues, depending on other factors. 
A) A government receives lower tax revenues by raising the tax rate. 
B) A government receives higher tax revenues by raising the tax rate. 
C) A government cannot change it tax revenues by changing the tax rate. 
D) A change in the tax rate can raise or lower tax revenues, depending on other factors.

Question 16

The distribution of tax burdens among various groups in society is referred to as

Accepted Answer

A) sectioning. 
B) regressive placement. 
C) zero-base budgeting. 
D) tax incidence. 
A) sectioning. 
B) regressive placement. 
C) zero-base budgeting. 
D) tax incidence.

Question 17

Static tax analysis assumes that

Accepted Answer

A) an increase in a tax rate may lead to a decrease in the tax base. 
B) an increase in a tax rate will lead to an increase in the tax base. 
C) an increase in a tax rate will leave the tax base unchanged. 
D) the tax base will always remain unchanged. 
A) an increase in a tax rate may lead to a decrease in the tax base. 
B) an increase in a tax rate will lead to an increase in the tax base. 
C) an increase in a tax rate will leave the tax base unchanged. 
D) the tax base will always remain unchanged.

Question 18

In what type of analysis could an increase in the tax rate lead to a decrease in tax revenues?

Accepted Answer

A) ad valorem taxation 
B) excise taxation 
C) dynamic tax analysis 
D) static tax analysis 
A) ad valorem taxation 
B) excise taxation 
C) dynamic tax analysis 
D) static tax analysis

Question 19

Reduction or elimination of dividend taxes is designed, in part, to

Accepted Answer

A) reduce the double taxation burden on individuals. 
B) make rich people richer. 
C) reduce inefficiencies in the production process. 
D) increase corporate tax levels. 
A) reduce the double taxation burden on individuals. 
B) make rich people richer. 
C) reduce inefficiencies in the production process. 
D) increase corporate tax levels.

Question 20

Suppose you are making $50,000 per year and paying $5,000 per year in income taxes. You get a $10,000 per year raise and your income taxes are now $6,000 per year. Based on this information, the income tax system is

Accepted Answer

A) proportional. 
B) progressive. 
C) regressive. 
D) bracketed. 
A) proportional. 
B) progressive. 
C) regressive. 
D) bracketed.

Dynamic tax analysis generally predicts

Which of the following is TRUE of an excise tax?

Ultimately, the real burden of paying for Social Security benefits will be paid for by

Should the government wish to lower the price of gasoline to the consumer, one approach might be

-Using the above figure, which of the lines in the above diagram represents a regressive tax?

A capital gain results when

Under a progressive income tax system, the marginal income tax rate paid by taxpayers

A sales tax is

Why is the government budget constraint different between the short run and the long run?

The marginal tax rate is

Which of the following statements about excise taxes is TRUE?

Which of the following is subject to double taxation?

The Social Security tax is considered to be a

-Using the above table, a unit tax of $2 is imposed on the product. The equilibrium price of this product after the tax is imposed is

Which of the following statements is TRUE of static tax analysis?

The distribution of tax burdens among various groups in society is referred to as

Static tax analysis assumes that

In what type of analysis could an increase in the tax rate lead to a decrease in tax revenues?

Reduction or elimination of dividend taxes is designed, in part, to

Suppose you are making $50,000 per year and paying $5,000 per year in income taxes. You get a $10,000 per year raise and your income taxes are now $6,000 per year. Based on this information, the income tax system is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 6: Funding the Public Sector

Dynamic tax analysis generally predicts

Which of the following is TRUE of an excise tax?

Ultimately, the real burden of paying for Social Security benefits will be paid for by

Should the government wish to lower the price of gasoline to the consumer, one approach might be

-Using the above figure, which of the lines in the above diagram represents a regressive tax?

A capital gain results when

Under a progressive income tax system, the marginal income tax rate paid by taxpayers

A sales tax is

Why is the government budget constraint different between the short run and the long run?

The marginal tax rate is

Which of the following statements about excise taxes is TRUE?

Which of the following is subject to double taxation?

The Social Security tax is considered to be a

-Using the above table, a unit tax of $2 is imposed on the product. The equilibrium price of this product after the tax is imposed is

Which of the following statements is TRUE of static tax analysis?

The distribution of tax burdens among various groups in society is referred to as

Static tax analysis assumes that

In what type of analysis could an increase in the tax rate lead to a decrease in tax revenues?

Reduction or elimination of dividend taxes is designed, in part, to

Suppose you are making $50,000 per year and paying $5,000 per year in income taxes. You get a $10,000 per year raise and your income taxes are now $6,000 per year. Based on this information, the income tax system is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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