Question 1

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 2

The choice of a voter to remain uninformed because the marginal cost of obtaining information is greater than the marginal benefit from obtaining knowledge is called:

Accepted Answer

A)  irrational ignorance. 
B)  rational ignorance. 
C)  collective interest. 
D)  choice. 
A)  irrational ignorance. 
B)  rational ignorance. 
C)  collective interest. 
D)  choice.

Question 3

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

Accepted Answer

Public choice theory emphasizes the poss

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

A tax whose impact varies inversely with the income of the person taxed,and poor people have a higher percentage of their income taxed than rich people,is known as a:

Accepted Answer

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

Question 6

Suppose fairness is defined as those who receive the greatest benefits from government should pay the most in taxes,then which of the following taxation systems would be consistent with this notion of fairness?

Accepted Answer

A)  User fees for national parks. 
B)  Gasoline taxes to fund highway maintenance. 
C)  A tax on the poor to finance food stamps and other low-income assistance programs. 
D)  All of the above are consistent. 
A)  User fees for national parks. 
B)  Gasoline taxes to fund highway maintenance. 
C)  A tax on the poor to finance food stamps and other low-income assistance programs. 
D)  All of the above are consistent.

Question 7

Which of the following statements is true?

Accepted Answer

A)  The most important source of revenue to the federal government is personal income taxes. 
B)  The most important source of revenue to state governments are sales and property taxes. 
C)  The most important source of revenue to local governments are local property taxes. 
D)  The taxation burden, measured by taxes as a percentage of GDP, is lighter in the United States than in most other advanced industrial countries. 
E)  All of the above. 
A)  The most important source of revenue to the federal government is personal income taxes. 
B)  The most important source of revenue to state governments are sales and property taxes. 
C)  The most important source of revenue to local governments are local property taxes. 
D)  The taxation burden, measured by taxes as a percentage of GDP, is lighter in the United States than in most other advanced industrial countries. 
E)  All of the above.

Question 8

Which of the following is an example of a progressive tax?

Accepted Answer

A)  The excise tax on cigarettes. 
B)  The federal tax on gasoline. 
C)  The federal personal income tax. 
D)  All of the above. 
A)  The excise tax on cigarettes. 
B)  The federal tax on gasoline. 
C)  The federal personal income tax. 
D)  All of the above.

Question 9

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 10

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)  one-third 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)  one-third of the U.S. economy. 
D)  one-half of the U.S. economy.

Question 11

Exhibit 16-3 Income for two persons
  
-In Exhibit 16-3,if the income tax system is currently proportional,we know that:

Accepted Answer

A)  Meredith would probably prefer a progressive income tax system while Hillary would probably prefer a regressive income tax system. 
B)  Meredith and Hillary would both probably prefer a regressive income tax system. 
C)  Meredith and Hillary would both probably prefer a progressive income tax system. 
D)  Meredith would probably prefer a regressive income tax system while Hillary would probably prefer a progressive income tax system. 
E)  Meredith would probably prefer a progressive income tax system while Hillary would probably prefer a head tax. 
A)  Meredith would probably prefer a progressive income tax system while Hillary would probably prefer a regressive income tax system. 
B)  Meredith and Hillary would both probably prefer a regressive income tax system. 
C)  Meredith and Hillary would both probably prefer a progressive income tax system. 
D)  Meredith would probably prefer a regressive income tax system while Hillary would probably prefer a progressive income tax system. 
E)  Meredith would probably prefer a progressive income tax system while Hillary would probably prefer a head tax.

Question 12

The study of the decision-making process of government is the study of:

Accepted Answer

A)  Keynesian economics. 
B)  public choice theory. 
C)  rational expectations theory. 
D)  social economics. 
A)  Keynesian economics. 
B)  public choice theory. 
C)  rational expectations theory. 
D)  social economics.

Question 13

Which of the following can be classified as a regressive tax?

Accepted Answer

A)  Federal corporate income tax. 
B)  Federal personal income tax. 
C)  Federal gasoline tax. 
D)  All of the above. 
A)  Federal corporate income tax. 
B)  Federal personal income tax. 
C)  Federal gasoline tax. 
D)  All of the above.

Question 14

The ability-to-pay philosophy of taxation argues for a progressive form of taxation.

Accepted Answer

A) True 
 B)False

Question 15

Consider two people,Sandy Smith,who earns $25,000,and Gary Carver,who earns $50,000.If the government has decided to tax everyone's first $25,000 at 20 percent and everyone's second $25,000 at 40 percent,then Gary pays:

Accepted Answer

A)  $10,000 in taxes and Sandy pays $5,000 in taxes. 
B)  $10,000 in taxes and Sandy pays $10,000 in taxes. 
C)  $15,000 in taxes and Sandy pays $5,000 in taxes. 
D)  $15,000 in taxes and Sandy pays $10,000 in taxes. 
E)  $17,000 in taxes and Sandy pays $5,000 in taxes. 
A)  $10,000 in taxes and Sandy pays $5,000 in taxes. 
B)  $10,000 in taxes and Sandy pays $10,000 in taxes. 
C)  $15,000 in taxes and Sandy pays $5,000 in taxes. 
D)  $15,000 in taxes and Sandy pays $10,000 in taxes. 
E)  $17,000 in taxes and Sandy pays $5,000 in taxes.

Question 16

Which of the following can be classified as a regressive tax?

Accepted Answer

A)  Excise tax. 
B)  Sales tax. 
C)  Gasoline tax. 
D)  All of the above. 
A)  Excise tax. 
B)  Sales tax. 
C)  Gasoline tax. 
D)  All of the above.

Question 17

People who often impose cost on the majority in order to benefit certain groups are called:

Accepted Answer

A)  laissez-faire groups. 
B)  encounter groups. 
C)  fair-interest groups. 
D)  special-interest groups. 
E)  none of the above. 
A)  laissez-faire groups. 
B)  encounter groups. 
C)  fair-interest groups. 
D)  special-interest groups. 
E)  none of the above.

Question 18

Currently,total government expenditures in the United States have totaled about:

Accepted Answer

A)  one-tenth of GDP. 
B)  one-fifth of GDP. 
C)  one-third of GDP. 
D)  one-half of GDP. 
A)  one-tenth of GDP. 
B)  one-fifth of GDP. 
C)  one-third of GDP. 
D)  one-half of GDP.

Question 19

If a person is taxed $100 on an income of $1,000,taxed $220 on an income of $2,000,and taxed $390 on an income of $3,000,this person is paying a:

Accepted Answer

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

Question 20

Jan has an income of $30,000 and pays $4,500 in taxes.When Jan's income rises to $40,000,her tax bill rises to $6,500.What is Jan's marginal tax rate?

Accepted Answer

A)  5 percent. 
B)  15 percent. 
C)  16.25 percent. 
D)  20 percent. 
A)  5 percent. 
B)  15 percent. 
C)  16.25 percent. 
D)  20 percent.

Exam 16: The Public Sector

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

The choice of a voter to remain uninformed because the marginal cost of obtaining information is greater than the marginal benefit from obtaining knowledge is called:

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

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

A tax whose impact varies inversely with the income of the person taxed,and poor people have a higher percentage of their income taxed than rich people,is known as a:

Suppose fairness is defined as those who receive the greatest benefits from government should pay the most in taxes,then which of the following taxation systems would be consistent with this notion of fairness?

Which of the following statements is true?

Which of the following is an example of a progressive tax?

Which of the following statements is false?

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

Exhibit 16-3 Income for two persons -In Exhibit 16-3,if the income tax system is currently proportional,we know that:

The study of the decision-making process of government is the study of:

Which of the following can be classified as a regressive tax?

The ability-to-pay philosophy of taxation argues for a progressive form of taxation.

Consider two people,Sandy Smith,who earns $25,000,and Gary Carver,who earns $50,000.If the government has decided to tax everyone's first $25,000 at 20 percent and everyone's second $25,000 at 40 percent,then Gary pays:

Which of the following can be classified as a regressive tax?

People who often impose cost on the majority in order to benefit certain groups are called:

Currently,total government expenditures in the United States have totaled about:

If a person is taxed $100 on an income of $1,000,taxed $220 on an income of $2,000,and taxed $390 on an income of $3,000,this person is paying a:

Jan has an income of $30,000 and pays $4,500 in taxes.When Jan's income rises to $40,000,her tax bill rises to $6,500.What is Jan's marginal tax rate?

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

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

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters