Question 1

The marginal tax rate is the tax rate that applies to additional income.

Accepted Answer

A) True 
 B)False

Question 2

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 3

The major expenditure of local governments is for education.

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 greater the elasticity of supply of and demand for a good,the:

Accepted Answer

A)  smaller will be the efficiency loss of an excise tax on the good. 
B)  more likely the good will be a public good rather than a private good. 
C)  larger will be the efficiency loss of an excise tax on the good. 
D)  larger will be the proportion of an excise tax on the good that will be shifted forward to consumers. 
A)  smaller will be the efficiency loss of an excise tax on the good. 
B)  more likely the good will be a public good rather than a private good. 
C)  larger will be the efficiency loss of an excise tax on the good. 
D)  larger will be the proportion of an excise tax on the good that will be shifted forward to consumers.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

If each taxpayer paid the same lump-sum amount regardless of income level,the tax system would be:

Accepted Answer

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

Question 8

(Last Word)In 2004,approximately what percent of household income was transferred from the top two quintiles to the lowest three quintiles?

Accepted Answer

A)  Zero. 
B)  10. 
C)  15. 
D)  22. 
A)  Zero. 
B)  10. 
C)  15. 
D)  22.

Question 9

Answer the question on the basis of the following data: $$\begin{array} { c c } 
\text { Taxable Income } & \text { Total Tax } \
\hline
 \$ 1,000 & \$ 0 \
2,000 & 100 \
3,000 & 300 \
4,000 & 600 \
5,000 & 1,000 \
6,000 & 1,500
\end{array}$$ Refer to the given data.If your taxable income is $4,000,your average tax rate will be:

Accepted Answer

A)  20 percent. 
B)  15 percent. 
C)  10 percent. 
D)  5 percent. 
A)  20 percent. 
B)  15 percent. 
C)  10 percent. 
D)  5 percent.

Question 10

The more inelastic is demand and supply,the:

Accepted Answer

A)  larger is the efficiency loss of an excise tax. 
B)  smaller is the efficiency loss of an excise tax. 
C)  higher is the proportion of an excise tax paid by consumers. 
D)  smaller is the proportion of an excise tax paid by producers. 
A)  larger is the efficiency loss of an excise tax. 
B)  smaller is the efficiency loss of an excise tax. 
C)  higher is the proportion of an excise tax paid by consumers. 
D)  smaller is the proportion of an excise tax paid by producers.

Question 11

The maximum federal marginal tax rate on taxable personal income is,as of 2013:

Accepted Answer

A)  50 percent. 
B)  39.6 percent. 
C)  35 percent. 
D)  28 percent. 
A)  50 percent. 
B)  39.6 percent. 
C)  35 percent. 
D)  28 percent.

Question 12

Which of the following is an exhaustive governmental outlay?

Accepted Answer

A)  A federal $5,000 subsidy check to an Illinois farmer. 
B)  A Temporary Assistance to Needy Families payment made by the state of New York. 
C)  A NASA payment to Boeing Corporation for space hardware. 
D)  A federal old age insurance payment to a retired coal miner. 
A)  A federal $5,000 subsidy check to an Illinois farmer. 
B)  A Temporary Assistance to Needy Families payment made by the state of New York. 
C)  A NASA payment to Boeing Corporation for space hardware. 
D)  A federal old age insurance payment to a retired coal miner.

Question 13

Approximately what percentage of state spending goes to finance education?

Accepted Answer

A)  36. 
B)  44. 
C)  47. 
D)  53. 
A)  36. 
B)  44. 
C)  47. 
D)  53.

Question 14

Which of the following is not an important source of revenue for the federal government?

Accepted Answer

A)  Corporate income taxes. 
B)  Property taxes. 
C)  Payroll taxes. 
D)  Personal income taxes. 
A)  Corporate income taxes. 
B)  Property taxes. 
C)  Payroll taxes. 
D)  Personal income taxes.

Question 15

The marginal tax rate is:

Accepted Answer

A)  the difference between the total tax rate and the average tax rate. 
B)  the percentage of total income paid as taxes. 
C)  change in taxes/change in taxable income. 
D)  total taxes/total taxable income. 
A)  the difference between the total tax rate and the average tax rate. 
B)  the percentage of total income paid as taxes. 
C)  change in taxes/change in taxable income. 
D)  total taxes/total taxable income.

Question 16

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

Accepted Answer

A)  A general sales tax. 
B)  A flat-rate state income tax. 
C)  A progressive federal income tax. 
D)  A property tax on an owner-occupied residence. 
A)  A general sales tax. 
B)  A flat-rate state income tax. 
C)  A progressive federal income tax. 
D)  A property tax on an owner-occupied residence.

Question 17

Currently (2013)the marginal tax rates of the federal personal income tax:

Accepted Answer

A)  are less than corresponding average tax rates. 
B)  rise from 5 to 35 percent. 
C)  fall from 20 to 10 percent. 
D)  rise from 10 to 39.6 percent. 
A)  are less than corresponding average tax rates. 
B)  rise from 5 to 35 percent. 
C)  fall from 20 to 10 percent. 
D)  rise from 10 to 39.6 percent.

Question 18

(Consider This)Which of the following claims is not made by opponents of a value-added tax (VAT)?

Accepted Answer

A)  Savings and investment is discouraged because future consumption is penalized. 
B)  The VAT is regressive,potentially leading to additional progressive taxes to offset the regressive VAT. 
C)  Sellers bear a disproportionately large burden of the tax. 
D)  The VAT is a hidden tax,and thus easier to raise to support the expansion of government. 
A)  Savings and investment is discouraged because future consumption is penalized. 
B)  The VAT is regressive,potentially leading to additional progressive taxes to offset the regressive VAT. 
C)  Sellers bear a disproportionately large burden of the tax. 
D)  The VAT is a hidden tax,and thus easier to raise to support the expansion of government.

Question 19

Given demand,the more inelastic the supply of a product,the larger the portion of an excise tax that is borne by producers.

Accepted Answer

A) True 
 B)False

Question 20

Assume the supply curve for product X is perfectly elastic and that government imposes a $2-per-unit excise tax.We can conclude that the resulting:

Accepted Answer

A)  increase in output will be greater the less elastic the demand curve. 
B)  decrease in output will be greater the less elastic the demand curve. 
C)  decrease in output will be greater the more elastic the demand curve. 
D)  increase in output will be greater the more elastic the demand curve. 
A)  increase in output will be greater the less elastic the demand curve. 
B)  decrease in output will be greater the less elastic the demand curve. 
C)  decrease in output will be greater the more elastic the demand curve. 
D)  increase in output will be greater the more elastic the demand curve.

Exam 19: Public Finance: Expenditures and Taxes

The marginal tax rate is the tax rate that applies to additional income.

With respect to local finance:

The major expenditure of local governments is for education.

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

The greater the elasticity of supply of and demand for a good,the:

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

If each taxpayer paid the same lump-sum amount regardless of income level,the tax system would be:

(Last Word)In 2004,approximately what percent of household income was transferred from the top two quintiles to the lowest three quintiles?

Answer the question on the basis of the following data: Taxable Income Total Tax \ 1,000 \ 0 2,000 100 3,000 300 4,000 600 5,000 1,000 6,000 1,500 Refer to the given data.If your taxable income is $4,000,your average tax rate will be:

The more inelastic is demand and supply,the:

The maximum federal marginal tax rate on taxable personal income is,as of 2013:

Which of the following is an exhaustive governmental outlay?

Approximately what percentage of state spending goes to finance education?

Which of the following is not an important source of revenue for the federal government?

The marginal tax rate is:

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

Currently (2013)the marginal tax rates of the federal personal income tax:

(Consider This)Which of the following claims is not made by opponents of a value-added tax (VAT)?

Given demand,the more inelastic the supply of a product,the larger the portion of an excise tax that is borne by producers.

Assume the supply curve for product X is perfectly elastic and that government imposes a $2-per-unit excise tax.We can conclude that the resulting:

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

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