Question 1

-Using the above figure, which of the lines in the above diagram represents a proportional tax?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  none of them 
A)  A 
B)  B 
C)  C 
D)  none of them

Question 2

In order for the government to collect taxes, the government must first establish a(n)

Accepted Answer

A)  ad valorem taxation. 
B)  tax base. 
C)  philosophy of taxation. 
D)  justice system. 
A)  ad valorem taxation. 
B)  tax base. 
C)  philosophy of taxation. 
D)  justice system.

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 consumer?

Accepted Answer

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

Question 4

The largest source of receipts for the federal government is

Accepted Answer

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

Question 5

The marginal income tax rate is equal to

Accepted Answer

A)  the total tax payment divided by total income. 
B)  the change in the tax payment divided by the change in income. 
C)  the average tax payment divided by the total tax payment. 
D)  the percent of total income that goes to taxes. 
A)  the total tax payment divided by total income. 
B)  the change in the tax payment divided by the change in income. 
C)  the average tax payment divided by the total tax payment. 
D)  the percent of total income that goes to taxes.

Question 6

Which of the following is subject to double taxation?

Accepted Answer

A)  income earned by people in the lowest tax bracket 
B)  Social Security income 
C)  dividends and retained earnings 
D)  income earned by government employees 
A)  income earned by people in the lowest tax bracket 
B)  Social Security income 
C)  dividends and retained earnings 
D)  income earned by government employees

Question 7

The imposition of a tax on a product

Accepted Answer

A)  shifts the supply curve to the right. 
B)  shifts the demand curve to the right. 
C)  shifts both the supply and the demand curve to the right. 
D)  shifts the supply curve to the left. 
A)  shifts the supply curve to the right. 
B)  shifts the demand curve to the right. 
C)  shifts both the supply and the demand curve to the right. 
D)  shifts the supply curve to the left.

Question 8

The largest share of federal government tax receipts is derived from

Accepted Answer

A)  corporate income taxes. 
B)  excise taxes. 
C)  social insurance contributions. 
D)  individual income taxes. 
A)  corporate income taxes. 
B)  excise taxes. 
C)  social insurance contributions. 
D)  individual income taxes.

Question 9

For all employee earnings subject to Social Security taxes, what is the current Social Security tax rate for employees?

Accepted Answer

A)  0.8% 
B)  2.9% 
C)  4.2% 
D)  6.2% 
A)  0.8% 
B)  2.9% 
C)  4.2% 
D)  6.2%

Question 10

Which of the following statements about excise taxes is TRUE?

Accepted Answer

A)  The producer will increase the price of the good by the amount of the excise tax. 
B)  The equilibrium price will increase and the equilibrium quantity will remain unchanged. 
C)  Both the consumer and producer pay part of the excise tax. 
D)  Consumers will refuse to pay excise taxes forcing the producers to pay it. 
A)  The producer will increase the price of the good by the amount of the excise tax. 
B)  The equilibrium price will increase and the equilibrium quantity will remain unchanged. 
C)  Both the consumer and producer pay part of the excise tax. 
D)  Consumers will refuse to pay excise taxes forcing the producers to pay it.

Question 11

When the profits of a corporation are taxed and the dividends paid to stockholders are also taxed,

Accepted Answer

A)  the government is engaging in double taxation. 
B)  the government is engaging in capital gains taxation. 
C)  the government is engaging in regressive taxation. 
D)  the government is engaging in progressive taxation. 
A)  the government is engaging in double taxation. 
B)  the government is engaging in capital gains taxation. 
C)  the government is engaging in regressive taxation. 
D)  the government is engaging in progressive taxation.

Question 12

For all employee earnings subject to Social Security taxes, what is the current Social Security tax rate for employers?

Accepted Answer

A)  0.8% 
B)  2.9% 
C)  4.2% 
D)  6.2% 
A)  0.8% 
B)  2.9% 
C)  4.2% 
D)  6.2%

Question 13

Local government expenditures depend on which taxes?

Accepted Answer

A)  Revenues from licenses and permits 
B)  Local property, sales, and excise taxes 
C)  Capital gains taxes 
D)  Social Security taxes 
A)  Revenues from licenses and permits 
B)  Local property, sales, and excise taxes 
C)  Capital gains taxes 
D)  Social Security taxes

Question 14

Suppose you purchased 100 shares of stock in 2010 for $20 a share, and the price now is $30 a share. If you sell the stock, then your capital gain is

Accepted Answer

A)  $1000. 
B)  $3000. 
C)  $1500. 
D)  indeterminate without knowing the inflation rate. 
A)  $1000. 
B)  $3000. 
C)  $1500. 
D)  indeterminate without knowing the inflation rate.

Question 15

Using the fiscal year 2013 estimates, the largest component of federal revenue is the

Accepted Answer

A)  individual income tax. 
B)  corporate income tax. 
C)  excise tax. 
D)  social insurance and contributions. 
A)  individual income tax. 
B)  corporate income tax. 
C)  excise tax. 
D)  social insurance and contributions.

Question 16

Suppose Jill has earned more income this year as compared to what she did last year. Her income tax has also increased. Does it necessarily mean that the income tax system is progressive? Explain.

Accepted Answer

No, the amount of income tax can increas

Question 17

Static tax analysis assumes

Accepted Answer

A)  all of the present tax rates will be in place for a minimum of twenty years. 
B)  changes in the tax rates have no effect on the tax base. 
C)  changes in the tax rates have no effect on tax revenue. 
D)  changes in the tax rates will change the tax base. 
A)  all of the present tax rates will be in place for a minimum of twenty years. 
B)  changes in the tax rates have no effect on the tax base. 
C)  changes in the tax rates have no effect on tax revenue. 
D)  changes in the tax rates will change the tax base.

Question 18

Suppose you are making $50,000 per year and paying $5,000 per year in income taxes. You get a $10,000 per year raise and your income taxes are now $6,000 per year. Based on this information, the income tax system is

Accepted Answer

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

Question 19

Jamal earns $160,000 per year and Josephina earns $80,000 per year. If Jamal pays $16,000 in income taxes and Josephina pays $5,000 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.

Question 20

Assume a family that earns $30,000 pays $3,000 in income taxes, while a family that earns $40,000 pays $3,500 in income taxes. In this situation, the income tax system is

Accepted Answer

A)  progressive. 
B)  regressive. 
C)  proportional. 
D)  one of the above but we cannot tell which one without more information. 
A)  progressive. 
B)  regressive. 
C)  proportional. 
D)  one of the above but we cannot tell which one without more information.

Exam 6: Funding the Public Sector

-Using the above figure, which of the lines in the above diagram represents a proportional tax?

In order for the government to collect taxes, the government must first establish a(n)

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

The largest source of receipts for the federal government is

The marginal income tax rate is equal to

Which of the following is subject to double taxation?

The imposition of a tax on a product

The largest share of federal government tax receipts is derived from

For all employee earnings subject to Social Security taxes, what is the current Social Security tax rate for employees?

Which of the following statements about excise taxes is TRUE?

When the profits of a corporation are taxed and the dividends paid to stockholders are also taxed,

For all employee earnings subject to Social Security taxes, what is the current Social Security tax rate for employers?

Local government expenditures depend on which taxes?

Suppose you purchased 100 shares of stock in 2010 for $20 a share, and the price now is $30 a share. If you sell the stock, then your capital gain is

Using the fiscal year 2013 estimates, the largest component of federal revenue is the

Suppose Jill has earned more income this year as compared to what she did last year. Her income tax has also increased. Does it necessarily mean that the income tax system is progressive? Explain.

Static tax analysis assumes

Suppose you are making $50,000 per year and paying $5,000 per year in income taxes. You get a $10,000 per year raise and your income taxes are now $6,000 per year. Based on this information, the income tax system 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 $5,000 in income taxes, the income tax system would be

Assume a family that earns $30,000 pays $3,000 in income taxes, while a family that earns $40,000 pays $3,500 in income taxes. In this situation, the income tax system is

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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