Question 1

A tax is proportional if,as a person's income rises,the:

Accepted Answer

A)  tax rate is constant. 
B)  tax rate falls. 
C)  tax rate rises. 
D)  amount of the tax is constant. 
E)  amount of the tax falls. 
A)  tax rate is constant. 
B)  tax rate falls. 
C)  tax rate rises. 
D)  amount of the tax is constant. 
E)  amount of the tax falls.

Question 2

A problem with the income security program category for federal government outlays is that it excludes unemployment compensation.

Accepted Answer

A) True 
 B)False

Question 3

If a person is taxed $1,000 on an income of $10,000,taxed $2,000 on an income of $20,000,and taxed $3,000 on an income of $30,000,this person is paying a:

Accepted Answer

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

Question 4

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

Accepted Answer

A)  Meredith has a larger tax bill than Hillary, although they pay the same tax rate. 
B)  Hillary has a larger tax bill than Meredith, although they pay the same tax rate. 
C)  Meredith has a larger tax bill than Hillary and pays a higher tax rate. 
D)  Hillary has a larger tax bill than Meredith and pays a higher tax rate. 
E)  Meredith and Hillary's tax bills are equal. 
A)  Meredith has a larger tax bill than Hillary, although they pay the same tax rate. 
B)  Hillary has a larger tax bill than Meredith, although they pay the same tax rate. 
C)  Meredith has a larger tax bill than Hillary and pays a higher tax rate. 
D)  Hillary has a larger tax bill than Meredith and pays a higher tax rate. 
E)  Meredith and Hillary's tax bills are equal.

Question 5

Exhibit 16-1 Income for two persons
  
-In Exhibit 16-1,if the income tax system is progressive,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 have tax bills that are different sizes. 
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 have tax bills that are different sizes. 
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 6

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:

Accepted Answer

A)  Gary and Sandy both pay taxes of the same percentage of total income. 
B)  Gary and Sandy pay the same amount of taxes. 
C)  Gary pays twice the tax amount Sandy pays. 
D)  Gary pays three times the tax amount Sandy pays. 
E)  Sandy does not pay taxes. 
A)  Gary and Sandy both pay taxes of the same percentage of total income. 
B)  Gary and Sandy pay the same amount of taxes. 
C)  Gary pays twice the tax amount Sandy pays. 
D)  Gary pays three times the tax amount Sandy pays. 
E)  Sandy does not pay taxes.

Question 7

A person who is in the 15 percent marginal tax bracket and has a total taxable income of $100,000 will owe $15,000 in taxes.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is the largest source of revenue for the federal government?

Accepted Answer

A)  corporate income tax 
B)  payroll tax 
C)  personal income tax 
D)  user charges 
A)  corporate income tax 
B)  payroll tax 
C)  personal income tax 
D)  user charges

Question 9

According to the public choice theory,voters who choose to remain uninformed about the issues are behaving irrationally.

Accepted Answer

A) True 
 B)False

Question 10

The Social Security payroll tax tends to be regressive.

Accepted Answer

A) True 
 B)False

Question 11

Government expenditures as a share of the U.S.economy are:

Accepted Answer

A)  the largest in the world. 
B)  the smallest in the world. 
C)  smaller than most Western European countries. 
D)  larger than Canada, France, and the United Kingdom but slightly smaller than Germany and Italy. 
A)  the largest in the world. 
B)  the smallest in the world. 
C)  smaller than most Western European countries. 
D)  larger than Canada, France, and the United Kingdom but slightly smaller than Germany and Italy.

Question 12

People who often create benefits for the minority and impose the cost on the majority are called:

Accepted Answer

A)  fair-interest groups. 
B)  encounter groups. 
C)  laissez-faire groups. 
D)  special-interest groups. 
A)  fair-interest groups. 
B)  encounter groups. 
C)  laissez-faire groups. 
D)  special-interest groups.

Question 13

Under a progressive tax system,the tax rate increases as income increases.

Accepted Answer

A) True 
 B)False

Question 14

A tax that is structured so that people pay the same percentage of their income in taxes is called a(n):

Accepted Answer

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

Question 15

Which of the following represents the basic principle of public choice theory?

Accepted Answer

A)  Politicians act consistently in the public's interest. 
B)  Politicians follow their own self-interest and seek to maximize their reelection chances, rather than promote the best interests of society. 
C)  Politicians act in the public interest once they are elected, but follow their own self-interest and seek to maximize their reelection chances during a political campaign. 
D)  None of the above. 
A)  Politicians act consistently in the public's interest. 
B)  Politicians follow their own self-interest and seek to maximize their reelection chances, rather than promote the best interests of society. 
C)  Politicians act in the public interest once they are elected, but follow their own self-interest and seek to maximize their reelection chances during a political campaign. 
D)  None of the above.

Question 16

Exhibit 16-4 Marginal tax rate lines
  
-In Exhibit 16-4,if A represents state and local taxes and B represents federal income taxes,what is the result of imposing both types of taxes?

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 17

If a person is taxed $100 on an income of $1,000,taxed $200 on an income of $2,000,and taxed $300 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 18

Which of the following taxes contributed the greatest percentage of total federal government tax revenues in recent years?

Accepted Answer

A)  Individual income taxes. 
B)  Corporate income taxes. 
C)  Social Security taxes. 
D)  Excise taxes. 
A)  Individual income taxes. 
B)  Corporate income taxes. 
C)  Social Security taxes. 
D)  Excise taxes.

Question 19

A tax for which the rate varies directly with the income of the person taxed is known as a(n):

Accepted Answer

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

Question 20

A progressive income tax means the percentage of income paid in taxes decreases as income increases.

Accepted Answer

A) True 
 B)False

Exam 16: The Public Sector

A tax is proportional if,as a person's income rises,the:

A problem with the income security program category for federal government outlays is that it excludes unemployment compensation.

If a person is taxed $1,000 on an income of $10,000,taxed $2,000 on an income of $20,000,and taxed $3,000 on an income of $30,000,this person is paying a:

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

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

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:

A person who is in the 15 percent marginal tax bracket and has a total taxable income of $100,000 will owe $15,000 in taxes.

Which of the following is the largest source of revenue for the federal government?

According to the public choice theory,voters who choose to remain uninformed about the issues are behaving irrationally.

The Social Security payroll tax tends to be regressive.

Government expenditures as a share of the U.S.economy are:

People who often create benefits for the minority and impose the cost on the majority are called:

Under a progressive tax system,the tax rate increases as income increases.

A tax that is structured so that people pay the same percentage of their income in taxes is called a(n):

Which of the following represents the basic principle of public choice theory?

Exhibit 16-4 Marginal tax rate lines -In Exhibit 16-4,if A represents state and local taxes and B represents federal income taxes,what is the result of imposing both types of taxes?

If a person is taxed $100 on an income of $1,000,taxed $200 on an income of $2,000,and taxed $300 on an income of $3,000,this person is paying a:

Which of the following taxes contributed the greatest percentage of total federal government tax revenues in recent years?

A tax for which the rate varies directly with the income of the person taxed is known as a(n):

A progressive income tax means the percentage of income paid in taxes decreases as income increases.

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