Question 1

A Lorenz curve summarises the information provided by a Gini coefficient.

Accepted Answer

A) True 
 B)False

Question 2

-Refer to Figure 16-6. If area X = 2060, area Y = 240, and area Z= 2700, calculate the Gini coefficient for Syldavia.

Accepted Answer

A)  0.05 
B)  0.12 
C)  0.46 
D)  0.85 
A)  0.05 
B)  0.12 
C)  0.46 
D)  0.85

Question 3

-Refer to Figure 16-1. Area B + C represents

Accepted Answer

A)  the portion of sales tax revenue borne by consumers. 
B)  the portion of sales tax revenue borne by producers. 
C)  the excess burden of the sales tax. 
D)  sales tax revenue collected by the government. 
A)  the portion of sales tax revenue borne by consumers. 
B)  the portion of sales tax revenue borne by producers. 
C)  the excess burden of the sales tax. 
D)  sales tax revenue collected by the government.

Question 4

Which of the following is a transfer payment?

Accepted Answer

A)  the subsidy program 
B)  a tax deduction 
C)  Social Security payments 
D)  an income tax credit 
A)  the subsidy program 
B)  a tax deduction 
C)  Social Security payments 
D)  an income tax credit

Question 5

When the demand for a product is less elastic than the supply, consumers pay the majority of the tax on the product.

Accepted Answer

A) True 
 B)False

Question 6

According to the ability-to-pay principle of taxation,

Accepted Answer

A)  individuals who receive the benefit of a good or service should bear a greater share of the tax burden. 
B)  it is fair to expect a greater share of the tax burden to be borne by people who have a greater ability to pay. 
C)  people in the same economic situation should bear an equal share of the tax burden. 
D)  individuals who are willing to bear a greater share of the tax burden should be compensated with nonmonetary benefits. 
A)  individuals who receive the benefit of a good or service should bear a greater share of the tax burden. 
B)  it is fair to expect a greater share of the tax burden to be borne by people who have a greater ability to pay. 
C)  people in the same economic situation should bear an equal share of the tax burden. 
D)  individuals who are willing to bear a greater share of the tax burden should be compensated with nonmonetary benefits.

Question 7

The government of Silverado raises revenue through a general income tax paid by all its residents to operate the city's marina. The marina is used by private boat owners. This method of raising revenue to operate the marina is

Accepted Answer

A)  consistent with the benefits-received principle. 
B)  consistent with the ability-to-pay principle. 
C)  inconsistent with the benefits-received principle. 
D)  inconsistent with the ability-to-pay principle. 
A)  consistent with the benefits-received principle. 
B)  consistent with the ability-to-pay principle. 
C)  inconsistent with the benefits-received principle. 
D)  inconsistent with the ability-to-pay principle.

Question 8

Explain the effect of price elasticities of supply and demand on tax incidence.

Accepted Answer

If demand is less elastic than

Question 9

-Refer to Figure 16-2. If the government imposes an excise tax of $1.00 on every unit sold, the government's revenue from the tax

Accepted Answer

A)  is larger if the supply curve is S0. 
B)  is larger if the supply curve is S1. 
C)  is identical under either supply curve. 
D)  is not maximised. 
A)  is larger if the supply curve is S0. 
B)  is larger if the supply curve is S1. 
C)  is identical under either supply curve. 
D)  is not maximised.

Question 10

The average tax rate is calculated as

Accepted Answer

A)  total income divided by the total tax paid. 
B)  the change in total tax paid divided by the change in income. 
C)  total tax paid divided by total income. 
D)  the change in income divided by the change in total tax paid. 
A)  total income divided by the total tax paid. 
B)  the change in total tax paid divided by the change in income. 
C)  total tax paid divided by total income. 
D)  the change in income divided by the change in total tax paid.

Question 11

If the marginal tax rate is greater than the average tax rate, the tax structure is described as regressive.

Accepted Answer

A) True 
 B)False

Question 12

The marginal tax rate is

Accepted Answer

A)  the amount of taxes paid as a percentage of income. 
B)  the amount of per-capita taxes paid. 
C)  the amount of taxes paid as a percentage of gross domestic product (GDP). 
D)  the fraction of each additional dollar of income that must be paid in taxes. 
A)  the amount of taxes paid as a percentage of income. 
B)  the amount of per-capita taxes paid. 
C)  the amount of taxes paid as a percentage of gross domestic product (GDP). 
D)  the fraction of each additional dollar of income that must be paid in taxes.

Question 13

Suppose the government imposes an 8 per cent sales tax on clothing items and the tax is levied on sellers. Who pays for the tax in this situation? (Assume that the demand curve is downward sloping and that the supply curve is upward sloping.)

Accepted Answer

A)  The tax is borne entirely by the sellers. 
B)  The sellers will pass on the entire sales tax to consumers, and therefore the consumers bear the tax. 
C)  The tax will be borne partly by consumers and partly by sellers. 
D)  It is not possible to answer the question without information on price elasticities. 
A)  The tax is borne entirely by the sellers. 
B)  The sellers will pass on the entire sales tax to consumers, and therefore the consumers bear the tax. 
C)  The tax will be borne partly by consumers and partly by sellers. 
D)  It is not possible to answer the question without information on price elasticities.

Question 14

Which of the following is not one of the concerns of some policymakers and economists that the increase in the share of income earned by the 1 per cent is damaging to the country?

Accepted Answer

A)  The higher incomes of the 1 per cent may give them disproportionate political influence through campaign contributions. 
B)  Countries with high levels of income inequality have lower growth rates than do countries with more equal distributions of income. 
C)  Further increases in marginal tax rates may reduce work, saving, and investment, thereby reducing economic growth. 
D)  Rising income inequality can lead to political unrest. 
A)  The higher incomes of the 1 per cent may give them disproportionate political influence through campaign contributions. 
B)  Countries with high levels of income inequality have lower growth rates than do countries with more equal distributions of income. 
C)  Further increases in marginal tax rates may reduce work, saving, and investment, thereby reducing economic growth. 
D)  Rising income inequality can lead to political unrest.

Question 15

The Gini coefficient is measured by

Accepted Answer

A)  summing up the cumulative income percentages on the Lorenz curve. 
B)  summing up the total income earned by the population and dividing by the size of the population. 
C)  using the formula: area between perfect inequality and Lorenz curve ÷ area between the line of perfect equality to the Lorenz curve. 
D)  using the formula: area between the line of perfect equality and the Lorenz curve ÷ the area under the line of perfect equality. 
A)  summing up the cumulative income percentages on the Lorenz curve. 
B)  summing up the total income earned by the population and dividing by the size of the population. 
C)  using the formula: area between perfect inequality and Lorenz curve ÷ area between the line of perfect equality to the Lorenz curve. 
D)  using the formula: area between the line of perfect equality and the Lorenz curve ÷ the area under the line of perfect equality.

Question 16

The federal corporate income tax is

Accepted Answer

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

Question 17

-Refer to Figure 16-1. Area F + G represents

Accepted Answer

A)  the portion of sales tax revenue borne by consumers. 
B)  the portion of sales tax revenue borne by producers. 
C)  the excess burden of the sales tax. 
D)  sales tax revenue collected by the government. 
A)  the portion of sales tax revenue borne by consumers. 
B)  the portion of sales tax revenue borne by producers. 
C)  the excess burden of the sales tax. 
D)  sales tax revenue collected by the government.

Question 18

If your income is $92 000 and you pay taxes of $19 475, what is your average tax rate? Show your work.

Accepted Answer

Average tax rate = $

Question 19

Most economists agree that some of the burden of the corporate income tax

Accepted Answer

A)  is reduced because the tax is progressive. 
B)  is shared by the federal government. 
C)  is reduced because the tax is used to attain a social objective. 
D)  is passed on to consumers in the form of higher prices. 
A)  is reduced because the tax is progressive. 
B)  is shared by the federal government. 
C)  is reduced because the tax is used to attain a social objective. 
D)  is passed on to consumers in the form of higher prices.

Question 20

If the marginal tax rate is equal to the average tax rate as taxable income increases, the tax structure is

Accepted Answer

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

A Lorenz curve summarises the information provided by a Gini coefficient.

-Refer to Figure 16-6. If area X = 2060, area Y = 240, and area Z= 2700, calculate the Gini coefficient for Syldavia.

-Refer to Figure 16-1. Area B + C represents

Which of the following is a transfer payment?

When the demand for a product is less elastic than the supply, consumers pay the majority of the tax on the product.

According to the ability-to-pay principle of taxation,

The government of Silverado raises revenue through a general income tax paid by all its residents to operate the city's marina. The marina is used by private boat owners. This method of raising revenue to operate the marina is

Explain the effect of price elasticities of supply and demand on tax incidence.

-Refer to Figure 16-2. If the government imposes an excise tax of $1.00 on every unit sold, the government's revenue from the tax

The average tax rate is calculated as

If the marginal tax rate is greater than the average tax rate, the tax structure is described as regressive.

The marginal tax rate is

Suppose the government imposes an 8 per cent sales tax on clothing items and the tax is levied on sellers. Who pays for the tax in this situation? (Assume that the demand curve is downward sloping and that the supply curve is upward sloping.)

Which of the following is not one of the concerns of some policymakers and economists that the increase in the share of income earned by the 1 per cent is damaging to the country?

The Gini coefficient is measured by

The federal corporate income tax is

-Refer to Figure 16-1. Area F + G represents

If your income is $92 000 and you pay taxes of $19 475, what is your average tax rate? Show your work.

Most economists agree that some of the burden of the corporate income tax

If the marginal tax rate is equal to the average tax rate as taxable income increases, the tax structure is

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

Filters

Exam 16: The Distribution of Income and Social Policy

A Lorenz curve summarises the information provided by a Gini coefficient.

-Refer to Figure 16-6. If area X = 2060, area Y = 240, and area Z= 2700, calculate the Gini coefficient for Syldavia.

-Refer to Figure 16-1. Area B + C represents

Which of the following is a transfer payment?

When the demand for a product is less elastic than the supply, consumers pay the majority of the tax on the product.

According to the ability-to-pay principle of taxation,

The government of Silverado raises revenue through a general income tax paid by all its residents to operate the city's marina. The marina is used by private boat owners. This method of raising revenue to operate the marina is

Explain the effect of price elasticities of supply and demand on tax incidence.

-Refer to Figure 16-2. If the government imposes an excise tax of $1.00 on every unit sold, the government's revenue from the tax

The average tax rate is calculated as

If the marginal tax rate is greater than the average tax rate, the tax structure is described as regressive.

The marginal tax rate is

Suppose the government imposes an 8 per cent sales tax on clothing items and the tax is levied on sellers. Who pays for the tax in this situation? (Assume that the demand curve is downward sloping and that the supply curve is upward sloping.)

Which of the following is not one of the concerns of some policymakers and economists that the increase in the share of income earned by the 1 per cent is damaging to the country?

The Gini coefficient is measured by

The federal corporate income tax is

-Refer to Figure 16-1. Area F + G represents

If your income is $92 000 and you pay taxes of $19 475, what is your average tax rate? Show your work.

Most economists agree that some of the burden of the corporate income tax

If the marginal tax rate is equal to the average tax rate as taxable income increases, the tax structure is

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

Filters