Question 1

An example of a regressive tax is the

Accepted Answer

A)  corporate income tax. 
B)  personal income tax. 
C)  Social Security tax. 
D)  state inheritance tax. 
A)  corporate income tax. 
B)  personal income tax. 
C)  Social Security tax. 
D)  state inheritance tax.

Question 2

-Refer to the above figure. An excise tax of $0.50 was imposed on this good. From the figure we can see that the

Accepted Answer

A)  producer will bear most of the tax. 
B)  consumer will bear most of the tax. 
C)  consumer and producer will share the tax. 
D)  amount of the tax collected is less than $0.50. 
A)  producer will bear most of the tax. 
B)  consumer will bear most of the tax. 
C)  consumer and producer will share the tax. 
D)  amount of the tax collected is less than $0.50.

Question 3

-Using the above table, a unit tax of $2 is imposed on the product. How much of the tax is paid by the producer?

Accepted Answer

A)  $2. 
B)  $1. 
C)  $3. 
D)  unable to determine. 
A)  $2. 
B)  $1. 
C)  $3. 
D)  unable to determine.

Question 4

Corporate profits are taxed twice because

Accepted Answer

A)  taxes are collected on profits before profits are distributed to shareholders. 
B)  the government wants to minimize the amount of tax paid on capital gains. 
C)  it is economically efficient to reduce the amount of retained earnings. 
D)  capital gains are not indexed to the rate of inflation. 
A)  taxes are collected on profits before profits are distributed to shareholders. 
B)  the government wants to minimize the amount of tax paid on capital gains. 
C)  it is economically efficient to reduce the amount of retained earnings. 
D)  capital gains are not indexed to the rate of inflation.

Question 5

Social Security taxes are

Accepted Answer

A)  progressive because all workers pay the tax. 
B)  regressive because higher income workers pay taxes on a smaller percentage of their income. 
C)  proportional because everyone is charged the same percentage tax rate. 
D)  regressive because higher income workers don't pay the tax. 
A)  progressive because all workers pay the tax. 
B)  regressive because higher income workers pay taxes on a smaller percentage of their income. 
C)  proportional because everyone is charged the same percentage tax rate. 
D)  regressive because higher income workers don't pay the tax.

Question 6

-Refer to the above figures. Which panel represents the expected relationship between tax revenue and the sales tax rate if static tax analysis is used?

Accepted Answer

A)  Panel 1 
B)  Panel 2 
C)  Panel 3 
D)  Panel 4 
A)  Panel 1 
B)  Panel 2 
C)  Panel 3 
D)  Panel 4

Question 7

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 8

A 2 percent tax is going to be applied to a $100,000 tax base. What can be said about the revenue collected assuming dynamic tax analysis?

Accepted Answer

A)  The total revenue will be zero. 
B)  The total revenue will be between $0 and $2,000. 
C)  The total revenue will be $2,000. 
D)  There is not enough information to determine what revenues will equal. 
A)  The total revenue will be zero. 
B)  The total revenue will be between $0 and $2,000. 
C)  The total revenue will be $2,000. 
D)  There is not enough information to determine what revenues will equal.

Question 9

A unit tax of $0.50 has been levied on a good. The equilibrium price of the good will most likely

Accepted Answer

A)  increase by $0.50. 
B)  remain unchanged. 
C)  decrease by $0.50. 
D)  increase by an amount less than $0.50. 
A)  increase by $0.50. 
B)  remain unchanged. 
C)  decrease by $0.50. 
D)  increase by an amount less than $0.50.

Question 10

The tax that brings in the most revenue in the United States is the

Accepted Answer

A)  capital gains tax. 
B)  corporate income tax. 
C)  Social Security tax. 
D)  personal income tax. 
A)  capital gains tax. 
B)  corporate income tax. 
C)  Social Security tax. 
D)  personal income tax.

Question 11

Unit excise taxes imposed on gasoline, alcohol, and cigarettes are

Accepted Answer

A)  largely paid by the producers because they want to maintain their level of sales. 
B)  largely paid by consumers because they are not very responsive to price changes. 
C)  shared equally between the producer and the consumer. 
D)  paid by the wholesalers of these products. 
A)  largely paid by the producers because they want to maintain their level of sales. 
B)  largely paid by consumers because they are not very responsive to price changes. 
C)  shared equally between the producer and the consumer. 
D)  paid by the wholesalers of these products.

Question 12

Using the fiscal year 2013 estimates, the largest component of state and local revenue is the

Accepted Answer

A)  individual income tax. 
B)  corporate income tax. 
C)  revenue from the federal government. 
D)  sales, excise, and gross receipts taxes. 
A)  individual income tax. 
B)  corporate income tax. 
C)  revenue from the federal government. 
D)  sales, excise, and gross receipts taxes.

Question 13

In a progressive income tax system,

Accepted Answer

A)  the marginal tax rate exceeds the average tax rate. 
B)  the average tax rate exceeds the marginal tax rate. 
C)  high income earners pay a lower percentage of their income in taxes than do low income earners. 
D)  the tax rate depends solely on how long an individual has been in the labor force. 
A)  the marginal tax rate exceeds the average tax rate. 
B)  the average tax rate exceeds the marginal tax rate. 
C)  high income earners pay a lower percentage of their income in taxes than do low income earners. 
D)  the tax rate depends solely on how long an individual has been in the labor force.

Question 14

Suppose the income tax rate is 0 percent on the first $10,000; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on all income above $70,000. Family A has income of $82,000 while Family B has income of $37,000. What are the marginal tax rates faced by the two families?

Accepted Answer

Since Family A's income ($82,0

Question 15

How can we anticipate the proportion of a newly imposed unit excise tax that consumers will pay?

Accepted Answer

A)  Consumers will pay most of the tax whenever their demand for a product is relatively unresponsive to price changes. 
B)  Consumers will always pay 100 percent of an excise tax. 
C)  Consumers will pay most of the tax whenever their demand for the product is very price sensitive. 
D)  Since producers always pay 100 percent of an excise tax, we know consumers will not pay any of the tax. 
A)  Consumers will pay most of the tax whenever their demand for a product is relatively unresponsive to price changes. 
B)  Consumers will always pay 100 percent of an excise tax. 
C)  Consumers will pay most of the tax whenever their demand for the product is very price sensitive. 
D)  Since producers always pay 100 percent of an excise tax, we know consumers will not pay any of the tax.

Question 16

The reason a corporation has retained earnings is to

Accepted Answer

A)  pay unemployment taxes. 
B)  make investments that will increase the value of the stock. 
C)  avoid the double taxation of corporate profits. 
D)  be able to make unemployment payments. 
A)  pay unemployment taxes. 
B)  make investments that will increase the value of the stock. 
C)  avoid the double taxation of corporate profits. 
D)  be able to make unemployment payments.

Question 17

The main source of government funding is

Accepted Answer

A)  user fees. 
B)  taxes. 
C)  borrowing. 
D)  transfer payments. 
A)  user fees. 
B)  taxes. 
C)  borrowing. 
D)  transfer payments.

Question 18

Using supply and demand analysis, graphically show what an excise tax does to equilibrium price and quantity. On your graph show the part of the tax paid by the consumer and the part paid by the producer.

Accepted Answer

Total tax = @#IMG-DLM& - @#IMG-DLM& Cons

Question 19

The tax base is

Accepted Answer

A)  the minimum amount of tax revenue that government must collect each year. 
B)  the maximum amount of tax revenue that government must collect each year. 
C)  the sum of all incomes earned in the United States. 
D)  the value of all goods, services, incomes, or wealth subject to taxation. 
A)  the minimum amount of tax revenue that government must collect each year. 
B)  the maximum amount of tax revenue that government must collect each year. 
C)  the sum of all incomes earned in the United States. 
D)  the value of all goods, services, incomes, or wealth subject to taxation.

Question 20

Jamal earns $160,000 per year and Josephina earns $80,000 per year. If Jamal pays $16,000 in income taxes and Josephina pays $8,000 in income taxes, the income tax system would be

Accepted Answer

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

Exam 6: Funding the Public Sector

An example of a regressive tax is the

-Refer to the above figure. An excise tax of $0.50 was imposed on this good. From the figure we can see that the

-Using the above table, a unit tax of $2 is imposed on the product. How much of the tax is paid by the producer?

Corporate profits are taxed twice because

Social Security taxes are

-Refer to the above figures. Which panel represents the expected relationship between tax revenue and the sales tax rate if static tax analysis is used?

Which of the following is true of an excise tax?

A 2 percent tax is going to be applied to a $100,000 tax base. What can be said about the revenue collected assuming dynamic tax analysis?

A unit tax of $0.50 has been levied on a good. The equilibrium price of the good will most likely

The tax that brings in the most revenue in the United States is the

Unit excise taxes imposed on gasoline, alcohol, and cigarettes are

Using the fiscal year 2013 estimates, the largest component of state and local revenue is the

In a progressive income tax system,

How can we anticipate the proportion of a newly imposed unit excise tax that consumers will pay?

The reason a corporation has retained earnings is to

The main source of government funding is

Using supply and demand analysis, graphically show what an excise tax does to equilibrium price and quantity. On your graph show the part of the tax paid by the consumer and the part paid by the producer.

The tax base is

Jamal earns $160,000 per year and Josephina earns $80,000 per year. If Jamal pays $16,000 in income taxes and Josephina pays $8,000 in income taxes, the income tax system would be

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

Measuring the Economys Performance

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

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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