Question 1

Returns to investments in human capital can be calculated with great accuracy.

Accepted Answer

A) True 
 B)False  False

Question 2

In the textbook,there was a discussion of the average numbers of hours worked in the US being around 34 hours per week.As you enter the work force,do you expect this number to increase or decrease?

Accepted Answer

Answers will vary based on expectations.Some would argue that with increasing tax burdens,people will be forced to work more hours (provided jobs are available).Others will argue that advances in technology will make working easier and less hours on average will be required.The issues of preferences must also be considered.

Question 3

A capital shortage results from insufficient capital to meet our national "needs."

Accepted Answer

A) True 
 B)False  True

Question 4

In the leisure-income model,taxing income causes

Accepted Answer

A) the budget constraint to kink. 
B) males to work to change their work habits dramatically. 
C) utility to increase. 
D) all of the above. 
A) the budget constraint to kink. 
B) males to work to change their work habits dramatically. 
C) utility to increase. 
D) all of the above.

Question 5

Sometimes increases in the wage rate will cause individuals to work more hours.It is also the case that this same increase could cause people to work fewer hours.What is happening to cause this variance?

Accepted Answer

This is generally a case of preferences.

Question 6

On the Laffer curve,an increase in tax rates causes tax revenue to increase if the starting point is

Accepted Answer

A) to the right of the top. 
B) exactly at the top. 
C) to the left of the top. 
D) to the farthest point to the right. 
A) to the right of the top. 
B) exactly at the top. 
C) to the left of the top. 
D) to the farthest point to the right.

Question 7

-Refer to Figure 18.1.If the total number of hours (T)per week is 168 and the wage rate is $10,how much consumption is possible if the number of hours worked is 35? How does your answer change if the wage rate decreases to $8.50 but number of hours worked also increases to 40?

Accepted Answer

At 35 hours worked,total consu

Question 8

Social savings is

Accepted Answer

A) just another way of defining security. 
B) the sum of government and private savings. 
C) government savings only. 
D) defined by higher rates of interest for the government. 
A) just another way of defining security. 
B) the sum of government and private savings. 
C) government savings only. 
D) defined by higher rates of interest for the government.

Question 9

An decrease in the interest rate will cause the intertemporal budget constraint to _______________ through the endowment point.

Accepted Answer

A) pivot clockwise 
B) pivot counter-clockwise 
C) shift clockwise 
D) shift counter-clockwise 
A) pivot clockwise 
B) pivot counter-clockwise 
C) shift clockwise 
D) shift counter-clockwise

Question 10

To accurately draw a labor supply curve,there should be a relationship between _______ and __________.

Accepted Answer

A) the wage rate;utility 
B) total expenditures;the wage rate 
C) the wage rate;hours worked 
D) taxes;utility 
A) the wage rate;utility 
B) total expenditures;the wage rate 
C) the wage rate;hours worked 
D) taxes;utility

Question 11

Suppose the labor supply equation is L = (W/3)- (4/3).The wage rate is initially 5.What is the amount of producer surplus here?

Accepted Answer

Putting in a wage of

Question 12

An intertemporal budget constraint

Accepted Answer

A) requires an endowment point. 
B) requires time to remain constant. 
C) has no endowment point. 
D) requires time to move in a loop. 
A) requires an endowment point. 
B) requires time to remain constant. 
C) has no endowment point. 
D) requires time to move in a loop.

Question 13

Jennifer lives in two periods.In the first period,her income is fixed at $72,000;in the second,she is gets a 4% raise in her income.She can borrow and save at the market interest rate of 5 percent.
(A)Sketch her intertemporal budget constraint.
(B)Suppose that Jennifer is unable to lend at any rate of interest,although she can still borrow at 5 percent.Sketch her new intertemporal budget constraint.

Accepted Answer

(A)Her income for the second year is 72,

Question 14

Human capital is

Accepted Answer

A) how firms use more humans than machines in the production process. 
B) the accumulation of investments that make people more productive. 
C) more costly than other forms of capital. 
D) none of the above. 
A) how firms use more humans than machines in the production process. 
B) the accumulation of investments that make people more productive. 
C) more costly than other forms of capital. 
D) none of the above.

Question 15

Residential housing consumption is not affected by U.S.personal income taxes.

Accepted Answer

A) True 
 B)False

Question 16

The Laffer curve is

Accepted Answer

A) never referred to in modern day discussions of public finance. 
B) a curve that describes the relationship between tax rates and tax revenues. 
C) used to describe the relationship between consumption and hours worked. 
D) a curve that refers to the endowment of time. 
A) never referred to in modern day discussions of public finance. 
B) a curve that describes the relationship between tax rates and tax revenues. 
C) used to describe the relationship between consumption and hours worked. 
D) a curve that refers to the endowment of time.

Question 17

Full loss offset allows individuals to

Accepted Answer

A) claim children as dependents. 
B) deduct mortgage interest from taxes. 
C) deduct savings interest from taxes. 
D) deduct capital losses from taxable income. 
A) claim children as dependents. 
B) deduct mortgage interest from taxes. 
C) deduct savings interest from taxes. 
D) deduct capital losses from taxable income.

Question 18

A compensation package offered by employers often includes

Accepted Answer

A) wages. 
B) health benefits. 
C) vacations. 
D) pensions. 
E) all of the above. 
A) wages. 
B) health benefits. 
C) vacations. 
D) pensions. 
E) all of the above.

Question 19

The tax code in the United States allows for the deductibility of mortgage interest,but not for interest on credit cards.Why is this difference allowed to exist?

Accepted Answer

Increasing home ownership is s

Question 20

In 2009,President Obama proposed limiting the value of deductions for high-earners.

Accepted Answer

A) True 
 B)False

Exam 18: Personal Taxation and Behavior

Returns to investments in human capital can be calculated with great accuracy.

In the textbook,there was a discussion of the average numbers of hours worked in the US being around 34 hours per week.As you enter the work force,do you expect this number to increase or decrease?

A capital shortage results from insufficient capital to meet our national "needs."

In the leisure-income model,taxing income causes

Sometimes increases in the wage rate will cause individuals to work more hours.It is also the case that this same increase could cause people to work fewer hours.What is happening to cause this variance?

On the Laffer curve,an increase in tax rates causes tax revenue to increase if the starting point is

-Refer to Figure 18.1.If the total number of hours (T)per week is 168 and the wage rate is $10,how much consumption is possible if the number of hours worked is 35? How does your answer change if the wage rate decreases to $8.50 but number of hours worked also increases to 40?

Social savings is

An decrease in the interest rate will cause the intertemporal budget constraint to _______________ through the endowment point.

To accurately draw a labor supply curve,there should be a relationship between _______ and __________.

Suppose the labor supply equation is L = (W/3)- (4/3).The wage rate is initially 5.What is the amount of producer surplus here?

An intertemporal budget constraint

Human capital is

Residential housing consumption is not affected by U.S.personal income taxes.

The Laffer curve is

Full loss offset allows individuals to

A compensation package offered by employers often includes

The tax code in the United States allows for the deductibility of mortgage interest,but not for interest on credit cards.Why is this difference allowed to exist?

In 2009,President Obama proposed limiting the value of deductions for high-earners.

Introduction

Tools of Positive Analysis

Tools of Normative Analysis

Public Goods

Externalities

Political Economy

Education

Cost-Benefit Analysis

The Health Care Market

Government and the Market for Health Care

Social Security

Income Redistribution: Conceptual Issues

Expenditure Programs for the Poor

Taxation and Income Distribution

Taxation and Efficiency

Efficient and Equitable Taxation

The Personal Income Tax

The Corporation Tax

Deficit Finance

Fundamental Tax Reform: Taxes on Consumption and Wealth

Public Finance in a Federal System

Filters

To accurately draw a labor supply curve,there should be a relationship between _ and ____.