Question 1

How does total taxes as a percentage of GDP in the United States compare to those of Western European countries,such as the United Kingdom,Germany,and Sweden?

Accepted Answer

A)  U.S. taxation is smaller. 
B)  U.S. taxation is about the same. 
C)  U.S. taxation is slightly larger. 
D)  U.S. taxation is substantially larger. 
A)  U.S. taxation is smaller. 
B)  U.S. taxation is about the same. 
C)  U.S. taxation is slightly larger. 
D)  U.S. taxation is substantially larger.

Question 2

Sharon pays a tax of $4,000 on her income of $40,000,while Brad pays a tax of $1,000 on his income of $20,000.This tax is:

Accepted Answer

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

Question 3

Rational voter ignorance occurs because the marginal cost of obtaining information is higher than the marginal benefit from obtaining the information.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is a regressive tax?

Accepted Answer

A)  A state tax of 5 percent of income. 
B)  A local sales tax of 5 percent. 
C)  The federal individual income tax. 
D)  A federal flat tax of 30 percent. 
A)  A state tax of 5 percent of income. 
B)  A local sales tax of 5 percent. 
C)  The federal individual income tax. 
D)  A federal flat tax of 30 percent.

Question 5

Which of the following answers best reflects the ability-to-pay philosophy of taxation?

Accepted Answer

A)  Property tax. 
B)  Progressive income tax. 
C)  Excise tax on gasoline. 
D)  Excise tax on cigarettes. 
A)  Property tax. 
B)  Progressive income tax. 
C)  Excise tax on gasoline. 
D)  Excise tax on cigarettes.

Question 6

The term "public sector" refers only to federal government purchases of goods and services.

Accepted Answer

A) True 
 B)False

Question 7

Since 1970,the composition of federal expenditures has:

Accepted Answer

A)  been virtually unchanged, but federal spending as a share of GDP has declined substantially. 
B)  been virtually unchanged, but federal spending as a share of GDP has increased sharply. 
C)  shifted away from national defense and toward spending on income security. 
D)  shifted away from income security income transfers and toward spending on national defense. 
A)  been virtually unchanged, but federal spending as a share of GDP has declined substantially. 
B)  been virtually unchanged, but federal spending as a share of GDP has increased sharply. 
C)  shifted away from national defense and toward spending on income security. 
D)  shifted away from income security income transfers and toward spending on national defense.

Question 8

Many public choice economists believe that elected political officials would make better choices if they had to vote for higher taxes in order to adopt new spending programs.

Accepted Answer

A) True 
 B)False

Question 9

Suppose fairness is defined as those with the highest incomes can afford to pay a greater proportion of their income in taxes.Then which of the following taxation systems would be consistent with this notion of fairness?

Accepted Answer

A)  A true flax tax. 
B)  A flat sales tax on consumption purchases. 
C)  A progressive tax on income. 
D)  A fixed federal tax of $5,000 that everyone pays regardless of income status. 
A)  A true flax tax. 
B)  A flat sales tax on consumption purchases. 
C)  A progressive tax on income. 
D)  A fixed federal tax of $5,000 that everyone pays regardless of income status.

Question 10

Since World War II,most of the growth in U.S.government outlays is attributable to rapidly growing federal government transfer programs.

Accepted Answer

A) True 
 B)False

Question 11

The federal income tax is progressive because the tax rates increase at higher income levels.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following countries devote the smallest percentage of its GDP to taxes?

Accepted Answer

A)  The United Kingdom. 
B)  Sweden. 
C)  Germany. 
D)  The United States. 
A)  The United Kingdom. 
B)  Sweden. 
C)  Germany. 
D)  The United States.

Question 13

Exhibit 16-4 Marginal tax rate lines
  
-In Exhibit 16-4,line A represents a(n):

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.

Question 14

According to the shortsightedness effect,politicians tend to favor projects with:

Accepted Answer

A)  short-run benefits and short-run costs. 
B)  short-run benefits and long-run costs. 
C)  long-run benefits and short-run costs. 
D)  long-run benefits and long-run costs. 
A)  short-run benefits and short-run costs. 
B)  short-run benefits and long-run costs. 
C)  long-run benefits and short-run costs. 
D)  long-run benefits and long-run costs.

Question 15

When a tax is regressive,as a person's income rises,the tax rate:

Accepted Answer

A)  stays the same. 
B)  decreases. 
C)  increases. 
D)  increase and then decreases. 
E)  decreases and then increases. 
A)  stays the same. 
B)  decreases. 
C)  increases. 
D)  increase and then decreases. 
E)  decreases and then increases.

Question 16

The amount of government expenditures on a project or program should continue to increase for as long as the marginal benefits exceed the marginal costs.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following U.S.taxes is the most consistent with the ability-to-pay principle?

Accepted Answer

A)  The excise tax on gasoline. 
B)  The federal income tax. 
C)  State sales taxes. 
D)  The Social Security payroll tax. 
A)  The excise tax on gasoline. 
B)  The federal income tax. 
C)  State sales taxes. 
D)  The Social Security payroll tax.

Question 18

The three major revenue sources for the federal government in order of decreasing percentages are individual income taxes,corporate taxes,and social security insurance.

Accepted Answer

A) True 
 B)False

Question 19

When the tax rate is constant when a person's income rises,the tax is a:

Accepted Answer

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

Question 20

When the government levies a tax where everyone is taxed the same fixed percentage of their incomes,this tax is known as a(n):

Accepted Answer

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

Exam 16: The Public Sector

How does total taxes as a percentage of GDP in the United States compare to those of Western European countries,such as the United Kingdom,Germany,and Sweden?

Sharon pays a tax of $4,000 on her income of $40,000,while Brad pays a tax of $1,000 on his income of $20,000.This tax is:

Rational voter ignorance occurs because the marginal cost of obtaining information is higher than the marginal benefit from obtaining the information.

Which of the following is a regressive tax?

Which of the following answers best reflects the ability-to-pay philosophy of taxation?

The term "public sector" refers only to federal government purchases of goods and services.

Since 1970,the composition of federal expenditures has:

Many public choice economists believe that elected political officials would make better choices if they had to vote for higher taxes in order to adopt new spending programs.

Suppose fairness is defined as those with the highest incomes can afford to pay a greater proportion of their income in taxes.Then which of the following taxation systems would be consistent with this notion of fairness?

Since World War II,most of the growth in U.S.government outlays is attributable to rapidly growing federal government transfer programs.

The federal income tax is progressive because the tax rates increase at higher income levels.

Which of the following countries devote the smallest percentage of its GDP to taxes?

Exhibit 16-4 Marginal tax rate lines -In Exhibit 16-4,line A represents a(n):

According to the shortsightedness effect,politicians tend to favor projects with:

When a tax is regressive,as a person's income rises,the tax rate:

The amount of government expenditures on a project or program should continue to increase for as long as the marginal benefits exceed the marginal costs.

Which of the following U.S.taxes is the most consistent with the ability-to-pay principle?

The three major revenue sources for the federal government in order of decreasing percentages are individual income taxes,corporate taxes,and social security insurance.

When the tax rate is constant when a person's income rises,the tax is a:

When the government levies a tax where everyone is taxed the same fixed percentage of their incomes,this tax is known as a(n):

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