Question 1

A highly progressive tax takes relatively more from the rich than it does from the poor.

Accepted Answer

A) True 
 B)False

Question 2

The government is like business firms in that it provides goods and services to households and businesses.

Accepted Answer

A) True 
 B)False

Question 3

When an excise tax or sales tax is imposed on a product, the sellers are always able to shift the burden of the tax on to the buyers.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is correct about the U.S. tax system?

Accepted Answer

A)  The primary federal tax system is regressive, while the primary state and local tax systems are progressive. 
B)  Both the primary federal tax system and the primary state and local tax systems are regressive. 
C)  The primary federal tax system is progressive, while the primary state and local tax systems are regressive. 
D)  Both the primary federal tax system and the primary state and local tax systems are progressive. 
A)  The primary federal tax system is regressive, while the primary state and local tax systems are progressive. 
B)  Both the primary federal tax system and the primary state and local tax systems are regressive. 
C)  The primary federal tax system is progressive, while the primary state and local tax systems are regressive. 
D)  Both the primary federal tax system and the primary state and local tax systems are progressive.

Question 5

The largest source of tax revenue for the U.S. federal government is

Accepted Answer

A)  personal income taxes. 
B)  property taxes. 
C)  corporate income taxes. 
D)  sales and excise taxes. 
A)  personal income taxes. 
B)  property taxes. 
C)  corporate income taxes. 
D)  sales and excise taxes.

Question 6

Given supply, the more inelastic the demand for a product, the larger the portion of an excise tax that is shifted to consumers.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following taxes is most likely to be regressive?

Accepted Answer

A)  personal income taxes 
B)  corporate income taxes 
C)  estate taxes 
D)  general sales taxes 
A)  personal income taxes 
B)  corporate income taxes 
C)  estate taxes 
D)  general sales taxes

Question 8

The Social Security tax is regressive because it applies only on income below a "cap" income level.

Accepted Answer

A) True 
 B)False

Question 9

Proprietary income refers to

Accepted Answer

A)  revenue flowing to the government from taxes. 
B)  money borrowed by the government to finance its operations. 
C)  revenue generated by government-run businesses. 
D)  transfer payments from the government to the owners of property resources. 
A)  revenue flowing to the government from taxes. 
B)  money borrowed by the government to finance its operations. 
C)  revenue generated by government-run businesses. 
D)  transfer payments from the government to the owners of property resources.

Question 10

The greater the elasticity of demand and supply, the greater is the efficiency loss of a tax.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements about payroll taxes is false?

Accepted Answer

A)  They provide funds for Social Security. 
B)  They include Medicare taxes. 
C)  Both employers and employees pay these taxes. 
D)  They are lump-sum taxes not based on wages/salaries. 
A)  They provide funds for Social Security. 
B)  They include Medicare taxes. 
C)  Both employers and employees pay these taxes. 
D)  They are lump-sum taxes not based on wages/salaries.

Question 12

The largest source of tax revenue for state governments is the property tax.

Accepted Answer

A) True 
 B)False

Question 13

Government purchases and transfer payments

Accepted Answer

A)  differ because the latter absorb resources while the former do not. 
B)  differ because the former absorb resources while the latter do not. 
C)  are alike because both are more inflationary than private spending. 
D)  are alike because both absorb resources. 
A)  differ because the latter absorb resources while the former do not. 
B)  differ because the former absorb resources while the latter do not. 
C)  are alike because both are more inflationary than private spending. 
D)  are alike because both absorb resources.

Question 14

In determining one's personal income tax, taxable income is

Accepted Answer

A)  total income less deductions and exemptions. 
B)  all income. 
C)  all income other than wages and salaries. 
D)  wage and salary income only. 
A)  total income less deductions and exemptions. 
B)  all income. 
C)  all income other than wages and salaries. 
D)  wage and salary income only.

Question 15

Approximately what percentage of the federal government's tax revenues are generated from personal income taxes (in 2015)?

Accepted Answer

A)  75 percent 
B)  28 percent 
C)  33 percent 
D)  47 percent 
A)  75 percent 
B)  28 percent 
C)  33 percent 
D)  47 percent

Question 16

(Advanced analysis) The equations for the demand and supply curves for a particular product are P = 10 − 0.4Q and P = 2 + 0.4Q, where P is price and Q is quantity expressed in units of 100. After an excise tax is imposed on the product, the supply equation is P = 3 + 0.4Q. Government's revenue from this tax is

Accepted Answer

A)  $750. 
B)  $1,500. 
C)  $875. 
D)  $800. 
A)  $750. 
B)  $1,500. 
C)  $875. 
D)  $800.

Question 17

With respect to local finance,

Accepted Answer

A)  death and gift taxes are the major source of revenue and most expenditures are for hospitals and health services. 
B)  the corporate income tax is the major source of revenue and natural resource development is the major type of expenditure. 
C)  property taxes are the basic source of revenue and education is the major type of expenditure. 
D)  sales and excise taxes are the major source of revenue and highway construction and maintenance is the major type of expenditure. 
A)  death and gift taxes are the major source of revenue and most expenditures are for hospitals and health services. 
B)  the corporate income tax is the major source of revenue and natural resource development is the major type of expenditure. 
C)  property taxes are the basic source of revenue and education is the major type of expenditure. 
D)  sales and excise taxes are the major source of revenue and highway construction and maintenance is the major type of expenditure.

Question 18

One difference between sales and excise taxes is that

Accepted Answer

A)  sales taxes are only applied at the state level, while excise taxes are only applied at the federal level. 
B)  excise taxes apply to a wide range of products, while sales taxes apply only to a select list of products. 
C)  sales taxes are calculated as a percentage of the price paid, while excise taxes are levied on a per-unit basis. 
D)  excise taxes are calculated as a percentage of the price paid, while sales taxes are levied on a per-unit basis. 
A)  sales taxes are only applied at the state level, while excise taxes are only applied at the federal level. 
B)  excise taxes apply to a wide range of products, while sales taxes apply only to a select list of products. 
C)  sales taxes are calculated as a percentage of the price paid, while excise taxes are levied on a per-unit basis. 
D)  excise taxes are calculated as a percentage of the price paid, while sales taxes are levied on a per-unit basis.

Question 19

From 1960 to 2015, as percentages of U.S. output, government purchases have

Accepted Answer

A)  declined, but transfer payments have increased significantly. 
B)  remained about the same, while transfer payments have increased slightly. 
C)  increased sharply, but transfer payments have also decreased significantly. 
D)  increased slightly, while transfer payments have remained about the same. 
A)  declined, but transfer payments have increased significantly. 
B)  remained about the same, while transfer payments have increased slightly. 
C)  increased sharply, but transfer payments have also decreased significantly. 
D)  increased slightly, while transfer payments have remained about the same.

Question 20

The progressive structure of the income-tax system is based on the

Accepted Answer

A)  benefits-received principle. 
B)  principle of diminishing returns. 
C)  ability-to-pay principle. 
D)  principle that "taxes are the price we pay for civilization." 
A)  benefits-received principle. 
B)  principle of diminishing returns. 
C)  ability-to-pay principle. 
D)  principle that "taxes are the price we pay for civilization."

Exam 20: Public Finance: Expenditures and Taxes

A highly progressive tax takes relatively more from the rich than it does from the poor.

The government is like business firms in that it provides goods and services to households and businesses.

When an excise tax or sales tax is imposed on a product, the sellers are always able to shift the burden of the tax on to the buyers.

Which of the following is correct about the U.S. tax system?

The largest source of tax revenue for the U.S. federal government is

Given supply, the more inelastic the demand for a product, the larger the portion of an excise tax that is shifted to consumers.

Which of the following taxes is most likely to be regressive?

The Social Security tax is regressive because it applies only on income below a "cap" income level.

Proprietary income refers to

The greater the elasticity of demand and supply, the greater is the efficiency loss of a tax.

Which of the following statements about payroll taxes is false?

The largest source of tax revenue for state governments is the property tax.

Government purchases and transfer payments

In determining one's personal income tax, taxable income is

Approximately what percentage of the federal government's tax revenues are generated from personal income taxes (in 2015)?

With respect to local finance,

One difference between sales and excise taxes is that

From 1960 to 2015, as percentages of U.S. output, government purchases have

The progressive structure of the income-tax system is based on the

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters