Question 1

State and local sales taxes are typically progressive.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Exhibit 16-1 Income for two persons
  
-In Exhibit 16-1,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. 
E)  Elaine will face a lower tax rate but will have a larger 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. 
E)  Elaine will face a lower tax rate but will have a larger tax bill than Daniel.

Question 4

There is no difference between government expenditures or outlays and government purchases or spending.

Accepted Answer

A) True 
 B)False

Question 5

The income security program category for federal government outlays includes spending for:

Accepted Answer

A)  Social Security. 
B)  Medicare. 
C)  Welfare. 
D)  Unemployment compensation. 
E)  All of the above. 
A)  Social Security. 
B)  Medicare. 
C)  Welfare. 
D)  Unemployment compensation. 
E)  All of the above.

Question 6

According to public choice theory,why might government policy benefit only a narrow interest group?

Accepted Answer

A) If the benefits to the narrow interest group are relatively large,they have an incentive to invest a lot of money and effort in lobbying government. 
B) If the costs of this policy are spread out among the general population,and are a very small burden for anyone person,then those paying the costs have little incentive to organize opposition. 
C) Both a.and b.are correct. 
D) None of the above is correct. 
A) If the benefits to the narrow interest group are relatively large,they have an incentive to invest a lot of money and effort in lobbying government. 
B) If the costs of this policy are spread out among the general population,and are a very small burden for anyone person,then those paying the costs have little incentive to organize opposition. 
C) Both a.and b.are correct. 
D) None of the above is correct.

Question 7

A proportional tax charges the same percentage of income,regardless of the size of income.

Accepted Answer

A) True 
 B)False

Question 8

Exhibit 16-4 Marginal tax rate lines
  
-In Exhibit 16-4,line B represents a:

Accepted Answer

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

Question 9

Describe the two basic philosophies of taxation fairness.

Accepted Answer

The two basic philosophies of taxation f

Question 10

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

Accepted Answer

The major source of tax revenu

Question 11

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

Question 12

Cost-benefit principles can be applied to the decision of:

Accepted Answer

A)  profit-maximizing firms. 
B)  majority-rule voting. 
C)  which project receives the most votes. 
D)  rational ignorance. 
E)  all of the above. 
A)  profit-maximizing firms. 
B)  majority-rule voting. 
C)  which project receives the most votes. 
D)  rational ignorance. 
E)  all of the above.

Question 13

The federal personal income tax was designed to be a:

Accepted Answer

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

Question 14

Cost-benefit analysis cannot be applied to collective or public choice decision-making.

Accepted Answer

A) True 
 B)False

Question 15

Who is recognized as the founder of public choice theory?

Accepted Answer

A)  James Buchanan. 
B)  Steve Forbes. 
C)  Joseph Pechman. 
D)  Adam Smith. 
A)  James Buchanan. 
B)  Steve Forbes. 
C)  Joseph Pechman. 
D)  Adam Smith.

Question 16

The federal income tax is progressive because poor people pay little or no taxes.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

A rational person may remain less than fully informed on an issue to be decided in an election.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)  climbed from 10 percent to over 35 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 over 35 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 20

Exhibit 16-4 Marginal tax rate lines
  
-In Exhibit 16-4,line C represents a:

Accepted Answer

A)  regressive tax. 
B)  progressive tax. 
C)  proportional tax. 
D)  ability-to-pay tax. 
A)  regressive tax. 
B)  progressive tax. 
C)  proportional tax. 
D)  ability-to-pay tax.

Exam 16: The Public Sector

State and local sales taxes are typically progressive.

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:

Exhibit 16-1 Income for two persons -In Exhibit 16-1,if the income tax system is proportional,then:

There is no difference between government expenditures or outlays and government purchases or spending.

The income security program category for federal government outlays includes spending for:

According to public choice theory,why might government policy benefit only a narrow interest group?

A proportional tax charges the same percentage of income,regardless of the size of income.

Exhibit 16-4 Marginal tax rate lines -In Exhibit 16-4,line B represents a:

Describe the two basic philosophies of taxation fairness.

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

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

Cost-benefit principles can be applied to the decision of:

The federal personal income tax was designed to be a:

Cost-benefit analysis cannot be applied to collective or public choice decision-making.

Who is recognized as the founder of public choice theory?

The federal income tax is progressive because poor people pay little or no taxes.

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

A rational person may remain less than fully informed on an issue to be decided in an election.

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

Exhibit 16-4 Marginal tax rate lines -In Exhibit 16-4,line C represents a:

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

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