Question 1

Taxes on commodities or on purchases are known as:

Accepted Answer

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

Question 2

Approximately what percentage of the U.S.labor force works for U.S.governments at the federal,state,and local levels (as of 2011)?

Accepted Answer

A)  8. 
B)  13. 
C)  16. 
D)  22. 
A)  8. 
B)  13. 
C)  16. 
D)  22. C

Question 3

Answer the question on the basis of the following demand and supply data for a competitive market: $\begin{array}{c}
\begin{array}{ccc}
\text { Quantity Demanded } &  \text { Price } \
\hline
1,500 & \$ 10 \
2,000 & 9 \
2,500 & 8 \
3,000 &  7 \
3,500 &  6\
\end{array}
\begin{array}{c}
\text{Quantity Supplied}\
\hline
3,500 \
3,000 \
2,500 \
2,000 \
1,500
\end{array}
\end{array}$ Refer to the given data.If government levies a per-unit excise tax of $1 on suppliers of this product,equilibrium price and quantity will be:

Accepted Answer

A)  $9 and 3,000. 
B)  $7.50 and 2,250. 
C)  $8.50 and 2,250. 
D)  $7 and 3,000. 
A)  $9 and 3,000. 
B)  $7.50 and 2,250. 
C)  $8.50 and 2,250. 
D)  $7 and 3,000. C

Question 4

Which of the following best reflects the ability-to-pay philosophy of taxation?

Accepted Answer

A)  A tax on residential property. 
B)  A progressive income tax. 
C)  An excise tax on gasoline. 
D)  An excise tax on coffee. 
A)  A tax on residential property. 
B)  A progressive income tax. 
C)  An excise tax on gasoline. 
D)  An excise tax on coffee.

Question 5

Approximately what percentage of the federal government's tax revenues are generated from personal income taxes (in 2012)?

Accepted Answer

A)  85 percent. 
B)  18 percent. 
C)  35 percent. 
D)  46 percent. 
A)  85 percent. 
B)  18 percent. 
C)  35 percent. 
D)  46 percent.

Question 6

The federal income tax is consistent with the __________ principle of taxation,whereas an excise tax on sporting event tickets is consistent with the ___________ principle of taxation.

Accepted Answer

A)  benefits-received;ability-to-pay. 
B)  benefits-received;pay-as-you-go. 
C)  ability-to-pay;benefits-received. 
D)  ability-to-pay;pay-as-you-go. 
A)  benefits-received;ability-to-pay. 
B)  benefits-received;pay-as-you-go. 
C)  ability-to-pay;benefits-received. 
D)  ability-to-pay;pay-as-you-go.

Question 7

The property tax may be regressive even though wealthy people own much more taxable property than do poor people.This possibility arises because:

Accepted Answer

A)  marginal and average tax rates on property tend to converge. 
B)  wealthy people can evade property taxes while poor people cannot. 
C)  property taxes on rental property and business property are shifted. 
D)  statutory property tax rates decline as the value of property rises. 
A)  marginal and average tax rates on property tend to converge. 
B)  wealthy people can evade property taxes while poor people cannot. 
C)  property taxes on rental property and business property are shifted. 
D)  statutory property tax rates decline as the value of property rises.

Question 8

Sales taxes on consumer goods are regressive because poor people consume a larger proportion of their incomes than do rich people.

Accepted Answer

A) True 
 B)False

Question 9

The sales tax is a regressive tax because the:

Accepted Answer

A)  percentage of income paid as taxes falls as income rises. 
B)  administrative costs associated with the collection of the tax are relatively high. 
C)  percentage of income paid as taxes is constant as income rises. 
D)  tax tends to reduce the total volume of consumption expenditures. 
A)  percentage of income paid as taxes falls as income rises. 
B)  administrative costs associated with the collection of the tax are relatively high. 
C)  percentage of income paid as taxes is constant as income rises. 
D)  tax tends to reduce the total volume of consumption expenditures.

Question 10

Sales taxes are proportional in relation to income because the same tax rate applies regardless of the size of a purchase.

Accepted Answer

A) True 
 B)False

Question 11

(Last Word)For each dollar paid in taxes,approximately how much do households in the top quintile receive back in the form of government expenditures?

Accepted Answer

A)  12 cents. 
B)  28 cents. 
C)  41 cents. 
D)  73 cents. 
A)  12 cents. 
B)  28 cents. 
C)  41 cents. 
D)  73 cents.

Question 12

If the supply of a product is perfectly elastic and demand is downsloping,an excise tax of $2 per unit will increase price by:

Accepted Answer

A)  more than $2. 
B)  less than $2. 
C)  $2 and increase equilibrium output. 
D)  $2 and reduce equilibrium output. 
A)  more than $2. 
B)  less than $2. 
C)  $2 and increase equilibrium output. 
D)  $2 and reduce equilibrium output.

Question 13

The main difference between sales and excise taxes is that:

Accepted Answer

A)  sales taxes apply to a wide range of products,while excise taxes apply only to a select group of products. 
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 consumption taxes,while excise taxes are not. 
D)  excise taxes are consumption taxes,while sales taxes are not. 
A)  sales taxes apply to a wide range of products,while excise taxes apply only to a select group of products. 
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 consumption taxes,while excise taxes are not. 
D)  excise taxes are consumption taxes,while sales taxes are not.

Question 14

The three most important sources of federal tax revenue in order of descending importance are:

Accepted Answer

A)  sales,payroll,and personal income taxes. 
B)  personal income,corporate income,and sales taxes. 
C)  personal income,corporate income,and payroll taxes. 
D)  personal income,payroll,and corporate income taxes. 
A)  sales,payroll,and personal income taxes. 
B)  personal income,corporate income,and sales taxes. 
C)  personal income,corporate income,and payroll taxes. 
D)  personal income,payroll,and corporate income taxes.

Question 15

Taxable income is:

Accepted Answer

A)  total income less deductions and exemptions. 
B)  the same as gross income. 
C)  the only income to which marginal tax rates apply. 
D)  the sum of all wage and property income. 
A)  total income less deductions and exemptions. 
B)  the same as gross income. 
C)  the only income to which marginal tax rates apply. 
D)  the sum of all wage and property income.

Question 16

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 17

Assume you pay a tax of $4,000 on a taxable income of $24,000.If your taxable income were $30,000,your tax payment would be $5,000.This suggests that the tax is:

Accepted Answer

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

Question 18

(Last Word)Which of the following statements about taxes and government spending is correct?

Accepted Answer

A)  Despite the overall progressive tax system,government expenditures disproportionately favor the rich and result in a system that is slightly regressive. 
B)  The progressive tax system is almost perfectly offset by regressive expenditures,making the overall system proportional. 
C)  The regressive tax system is offset by expenditures directed toward lower-income households,making the overall system proportional. 
D)  The overall system of taxes and spending is progressive,as over $1 trillion per year gets transferred from upper-income households to lower- and middle-income households. 
A)  Despite the overall progressive tax system,government expenditures disproportionately favor the rich and result in a system that is slightly regressive. 
B)  The progressive tax system is almost perfectly offset by regressive expenditures,making the overall system proportional. 
C)  The regressive tax system is offset by expenditures directed toward lower-income households,making the overall system proportional. 
D)  The overall system of taxes and spending is progressive,as over $1 trillion per year gets transferred from upper-income households to lower- and middle-income households.

Question 19

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of demand for X is unitary (coefficient = 1).If the incidence of the tax is such that the producers of X pay $1.75 of the tax and the consumers pay $.25,we can conclude that the:

Accepted Answer

A)  supply of X is highly inelastic. 
B)  supply of X is highly elastic. 
C)  demand for X is highly inelastic. 
D)  demand for X is highly elastic. 
A)  supply of X is highly inelastic. 
B)  supply of X is highly elastic. 
C)  demand for X is highly inelastic. 
D)  demand for X is highly elastic.

Question 20

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.

Taxes on commodities or on purchases are known as:

Approximately what percentage of the U.S.labor force works for U.S.governments at the federal,state,and local levels (as of 2011)?

Which of the following best reflects the ability-to-pay philosophy of taxation?

Approximately what percentage of the federal government's tax revenues are generated from personal income taxes (in 2012)?

The federal income tax is consistent with the principle of taxation,whereas an excise tax on sporting event tickets is consistent with the _ principle of taxation.

The property tax may be regressive even though wealthy people own much more taxable property than do poor people.This possibility arises because:

Sales taxes on consumer goods are regressive because poor people consume a larger proportion of their incomes than do rich people.

The sales tax is a regressive tax because the:

Sales taxes are proportional in relation to income because the same tax rate applies regardless of the size of a purchase.

(Last Word)For each dollar paid in taxes,approximately how much do households in the top quintile receive back in the form of government expenditures?

If the supply of a product is perfectly elastic and demand is downsloping,an excise tax of $2 per unit will increase price by:

The main difference between sales and excise taxes is that:

The three most important sources of federal tax revenue in order of descending importance are:

Taxable income is:

One difference between sales and excise taxes is that:

Assume you pay a tax of $4,000 on a taxable income of $24,000.If your taxable income were $30,000,your tax payment would be $5,000.This suggests that the tax is:

(Last Word)Which of the following statements about taxes and government spending is correct?

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of demand for X is unitary (coefficient = 1).If the incidence of the tax is such that the producers of X pay $1.75 of the tax and the consumers pay $.25,we can conclude that the:

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

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

Filters

Exam 19: Public Finance: Expenditures and Taxes

Taxes on commodities or on purchases are known as:

Approximately what percentage of the U.S.labor force works for U.S.governments at the federal,state,and local levels (as of 2011)?

Which of the following best reflects the ability-to-pay philosophy of taxation?

Approximately what percentage of the federal government's tax revenues are generated from personal income taxes (in 2012)?

The federal income tax is consistent with the __________ principle of taxation,whereas an excise tax on sporting event tickets is consistent with the ___________ principle of taxation.

The property tax may be regressive even though wealthy people own much more taxable property than do poor people.This possibility arises because:

Sales taxes on consumer goods are regressive because poor people consume a larger proportion of their incomes than do rich people.

The sales tax is a regressive tax because the:

Sales taxes are proportional in relation to income because the same tax rate applies regardless of the size of a purchase.

(Last Word)For each dollar paid in taxes,approximately how much do households in the top quintile receive back in the form of government expenditures?

If the supply of a product is perfectly elastic and demand is downsloping,an excise tax of $2 per unit will increase price by:

The main difference between sales and excise taxes is that:

The three most important sources of federal tax revenue in order of descending importance are:

Taxable income is:

One difference between sales and excise taxes is that:

Assume you pay a tax of $4,000 on a taxable income of $24,000.If your taxable income were $30,000,your tax payment would be $5,000.This suggests that the tax is:

(Last Word)Which of the following statements about taxes and government spending is correct?

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of demand for X is unitary (coefficient = 1).If the incidence of the tax is such that the producers of X pay $1.75 of the tax and the consumers pay $.25,we can conclude that the:

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

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

Filters

The federal income tax is consistent with the principle of taxation,whereas an excise tax on sporting event tickets is consistent with the _ principle of taxation.