Question 1

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

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain B

Question 2

In the textbook,there was a discussion of the average numbers of hours worked in the U.S.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 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain A

Question 4

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 5

A compensation package offered by employers often includes

Accepted Answer

A)  wages. 
B)  health benefits. 
C)  vacations. 
D)  pensions. 
E)  all of these answer options are correct. 
A)  wages. 
B)  health benefits. 
C)  vacations. 
D)  pensions. 
E)  all of these answer options are correct.

Question 6

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 7

The theoretical effects of taxation on portfolio composition are ambiguous.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain

Question 8

An individual's consumption and saving behavior during a given year,as a result of a planning process that considers his or her lifetime economic situations,is known as the

Accepted Answer

A)  lifetime model. 
B)  consumption model. 
C)  life-cycle model. 
D)  income model. 
A)  lifetime model. 
B)  consumption model. 
C)  life-cycle model. 
D)  income model.

Question 9

An example of a tax-preferred savings account would be

Accepted Answer

A)  an IRA. 
B)  an interest bearing savings account. 
C)  a noninterest bearing checking account. 
D)  cash. 
A)  an IRA. 
B)  an interest bearing savings account. 
C)  a noninterest bearing checking account. 
D)  cash.

Question 10

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 these answer options are correct. 
A)  the budget constraint to kink. 
B)  males to work to change their work habits dramatically. 
C)  utility to increase. 
D)  all of these answer options are correct.

Question 11

The analysis of a progressive tax is very similar to that of a proportional tax.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain

Question 12

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

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain

Question 13

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

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain

Question 14

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 15

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 16

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 17

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 18

The consumption bundle that is available,if there are no exchanges with the market,is known as the

Accepted Answer

A)  federal system. 
B)  endowment point. 
C)  Ramsey rule. 
D)  gross replacement rate. 
A)  federal system. 
B)  endowment point. 
C)  Ramsey rule. 
D)  gross replacement rate.

Question 19

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 20

A 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

Exam 18: Personal Taxation and Behavior

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

In the textbook,there was a discussion of the average numbers of hours worked in the U.S.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."

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

A compensation package offered by employers often includes

The theoretical effects of taxation on portfolio composition are ambiguous.

An individual's consumption and saving behavior during a given year,as a result of a planning process that considers his or her lifetime economic situations,is known as the

An example of a tax-preferred savings account would be

In the leisure-income model,taxing income causes

The analysis of a progressive tax is very similar to that of a proportional tax.

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

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

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?

The Laffer curve is

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

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?

The consumption bundle that is available,if there are no exchanges with the market,is known as the

Full loss offset allows individuals to

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

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 ____.