Question 1

When decisions are made by majority rule,the individual consumption-payment link is broken.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would be considered special interest group?

Accepted Answer

A)  National Rifle Association 
B)  Greenpeace 
C)  the U.S. sugar industry 
D)  all of the above 
A)  National Rifle Association 
B)  Greenpeace 
C)  the U.S. sugar industry 
D)  all of the above

Question 3

If Stephen earns $100,000 this year and pays $20,000 in taxes and Chris earns $50,000 this year and pays $5,000 in taxes,this tax system would appear to be

Accepted Answer

A)  progressive. 
B)  proportional. 
C)  regressive. 
D)  none of the above 
A)  progressive. 
B)  proportional. 
C)  regressive. 
D)  none of the above

Question 4

When you add payroll taxes and Medicare,the tax system becomes more progressive than when we solely consider the federal income tax:

Accepted Answer

A) True 
 B)False

Question 5

In a proportional tax system each individual would pay the same percentage of his or her income in taxes.

Accepted Answer

A) True 
 B)False

Question 6

The idea of rational ignorance implies that people are fully informed about their market purchases but uninformed about political issues.

Accepted Answer

A) True 
 B)False

Question 7

In recent years,more than one quarter of federal government spending went to Social Security and income security programs.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following accounted for the highest percentage of state and local spending in 2010?

Accepted Answer

A)  education 
B)  public welfare 
C)  transportation 
D)  social security 
A)  education 
B)  public welfare 
C)  transportation 
D)  social security

Question 9

The ability to pay principle suggests that:

Accepted Answer

A)  traditional exemptions should be removed since they are more frequently used by people with ability to pay more taxes. 
B)  people with different levels of income should be treated in the same manner. 
C)  individuals receiving the benefits should be those who pay for them. 
D)  those with the greatest ability to pay taxes should pay more than those with the least ability to pay taxes. 
A)  traditional exemptions should be removed since they are more frequently used by people with ability to pay more taxes. 
B)  people with different levels of income should be treated in the same manner. 
C)  individuals receiving the benefits should be those who pay for them. 
D)  those with the greatest ability to pay taxes should pay more than those with the least ability to pay taxes.

Question 10

Exhibit 9-1 A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages.Assume that the flat tax rate is 12%.
Refer to Exhibit 9-1.How much income tax would you have to pay if you were earning $50,000 a year?

Accepted Answer

A)  zero 
B)  $1,200 
C)  $3,000 
D)  $6,000 
A)  zero 
B)  $1,200 
C)  $3,000 
D)  $6,000

Question 11

Which of the following is not an option that could be used to save Social Security?

Accepted Answer

A)  Decreasing the age required for full-time benefits. 
B)  Implementing means testing 
C)  Allowing individuals to opt out of the Social Security system 
D)  Increasing the return to Social Security funds 
A)  Decreasing the age required for full-time benefits. 
B)  Implementing means testing 
C)  Allowing individuals to opt out of the Social Security system 
D)  Increasing the return to Social Security funds

Question 12

The U.S.federal government relies more heavily on sales taxes,excise taxes,and customs duties than nearly any other government in the world.

Accepted Answer

A) True 
 B)False

Question 13

Vertical equity is the concept that people with similar levels of income should be treated similarly.

Accepted Answer

A) True 
 B)False

Question 14

The benefits received principle means those with the least ability to pay should be the ones to receive the benefits.

Accepted Answer

A) True 
 B)False

Question 15

The benefits received principle would not work well in which of the following cases?

Accepted Answer

A)  gasoline tax 
B)  national defense 
C)  taxing those people who use a private good 
D)  admission fees to a national park 
A)  gasoline tax 
B)  national defense 
C)  taxing those people who use a private good 
D)  admission fees to a national park

Question 16

Public choice theory assumes that each voter will tend to favor the political candidate who offers:

Accepted Answer

A)  programs with the largest social benefits. 
B)  equality of government-provided benefits across all citizens. 
C)  programs that will yield the greatest personal benefits net of personal cost. 
D)  a plan requiring the least amount of tax dollars, regardless of the level of benefits provided. 
A)  programs with the largest social benefits. 
B)  equality of government-provided benefits across all citizens. 
C)  programs that will yield the greatest personal benefits net of personal cost. 
D)  a plan requiring the least amount of tax dollars, regardless of the level of benefits provided.

Question 17

The administrative burden of taxation relates to the

Accepted Answer

A)  the disincentive for individuals and businesses to work generate income. 
B)  individuals' cost of preparing tax returns and the government's cost of enforcing tax laws. 
C)  the opportunity cost of social programs. 
D)  the net interest that must be paid on the national debt. 
A)  the disincentive for individuals and businesses to work generate income. 
B)  individuals' cost of preparing tax returns and the government's cost of enforcing tax laws. 
C)  the opportunity cost of social programs. 
D)  the net interest that must be paid on the national debt.

Question 18

Why might voters tend to be relatively uninformed about political issues?

Accepted Answer

Individuals act in their own self-intere

Question 19

Which of the following accounts for the largest percentage of federal taxes?

Accepted Answer

A)  gift taxes 
B)  social security tax 
C)  individual income taxes 
D)  corporate income taxes 
A)  gift taxes 
B)  social security tax 
C)  individual income taxes 
D)  corporate income taxes

Question 20

A special interest issue is one that:

Accepted Answer

A)  provides large private benefits and large social benefits. 
B)  provides small private benefits and large social benefits. 
C)  provides large benefits to each of a small number of people and small costs to each of a large number of people. 
D)  provides small benefits to each of a small number of people and large costs to each of a large number of people. 
A)  provides large private benefits and large social benefits. 
B)  provides small private benefits and large social benefits. 
C)  provides large benefits to each of a small number of people and small costs to each of a large number of people. 
D)  provides small benefits to each of a small number of people and large costs to each of a large number of people.

Exam 9: Public Finance and Public Choice

When decisions are made by majority rule,the individual consumption-payment link is broken.

Which of the following would be considered special interest group?

If Stephen earns $100,000 this year and pays $20,000 in taxes and Chris earns $50,000 this year and pays $5,000 in taxes,this tax system would appear to be

When you add payroll taxes and Medicare,the tax system becomes more progressive than when we solely consider the federal income tax:

In a proportional tax system each individual would pay the same percentage of his or her income in taxes.

The idea of rational ignorance implies that people are fully informed about their market purchases but uninformed about political issues.

In recent years,more than one quarter of federal government spending went to Social Security and income security programs.

Which of the following accounted for the highest percentage of state and local spending in 2010?

The ability to pay principle suggests that:

Exhibit 9-1 A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages.Assume that the flat tax rate is 12%. Refer to Exhibit 9-1.How much income tax would you have to pay if you were earning $50,000 a year?

Which of the following is not an option that could be used to save Social Security?

The U.S.federal government relies more heavily on sales taxes,excise taxes,and customs duties than nearly any other government in the world.

Vertical equity is the concept that people with similar levels of income should be treated similarly.

The benefits received principle means those with the least ability to pay should be the ones to receive the benefits.

The benefits received principle would not work well in which of the following cases?

Public choice theory assumes that each voter will tend to favor the political candidate who offers:

The administrative burden of taxation relates to the

Why might voters tend to be relatively uninformed about political issues?

Which of the following accounts for the largest percentage of federal taxes?

A special interest issue is one that:

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

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