Question 1

If the government wants to minimise the welfare loss of a tax,it should tax goods with more inelastic demands or supplies.

Accepted Answer

A) True 
 B)False  True

Question 2

The horizontal-equity principle of taxation is not easy to use in practice because

Accepted Answer

A)  some people engage in rent seeking to reduce their taxes below the level other people pay. 
B)  people can use tax loopholes to reduce their incomes below the incomes of other taxpayers. 
C)  different people receive different levels of government benefits even if their incomes are the same. 
D)  it is difficult to determine whether people are in the same economic situation. 
A)  some people engage in rent seeking to reduce their taxes below the level other people pay. 
B)  people can use tax loopholes to reduce their incomes below the incomes of other taxpayers. 
C)  different people receive different levels of government benefits even if their incomes are the same. 
D)  it is difficult to determine whether people are in the same economic situation. D

Question 3

A marginal tax rate is

Accepted Answer

A)  the fraction of income that must be paid in taxes. 
B)  the fraction of each additional dollar of income that must be paid in taxes. 
C)  the incremental income one must earn to offset each additional dollar of tax. 
D)  the ratio of a change in income to a change in taxes paid. 
A)  the fraction of income that must be paid in taxes. 
B)  the fraction of each additional dollar of income that must be paid in taxes. 
C)  the incremental income one must earn to offset each additional dollar of tax. 
D)  the ratio of a change in income to a change in taxes paid. B

Question 4

Consider a public good such as fire protection services.Rich people may benefit more than the poor from such a service because rich people stand to lose more from a fire that destroys property.In this case,

Accepted Answer

A)  the ability-to-pay principle may support the rich paying more taxes than the poor, but not the benefits-received principle. 
B)  the benefits-received principle may support the rich paying more taxes than the poor, but not the ability-to-pay principle. 
C)  both the benefits-received and the ability-to-pay principles may support the rich paying more taxes than the poor. 
D)  neither the benefits-received nor the ability-to-pay principles may support the rich paying more taxes than the poor. 
A)  the ability-to-pay principle may support the rich paying more taxes than the poor, but not the benefits-received principle. 
B)  the benefits-received principle may support the rich paying more taxes than the poor, but not the ability-to-pay principle. 
C)  both the benefits-received and the ability-to-pay principles may support the rich paying more taxes than the poor. 
D)  neither the benefits-received nor the ability-to-pay principles may support the rich paying more taxes than the poor.

Question 5

Figure 12.2   Figure 12.2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 12.2.If the government imposes an excise tax of $1.00 on every unit sold,

Accepted Answer

A)  the deadweight loss is identical under either supply curve. 
B)  the deadweight loss is greater under the supply curve S1. 
C)  the deadweight loss is greater under the supply curve S0. 
D)  there is no deadweight loss since revenue raised is used to fund government projects. 
A)  the deadweight loss is identical under either supply curve. 
B)  the deadweight loss is greater under the supply curve S1. 
C)  the deadweight loss is greater under the supply curve S0. 
D)  there is no deadweight loss since revenue raised is used to fund government projects.

Question 6

What happens when the demand for a product is more elastic than the supply?

Accepted Answer

A)  Firms pay the majority of the tax on the product. 
B)  Consumers pay the entire tax on the product. 
C)  Consumers pay the majority of the tax on the product. 
D)  Firms pay the entire tax on the product. 
A)  Firms pay the majority of the tax on the product. 
B)  Consumers pay the entire tax on the product. 
C)  Consumers pay the majority of the tax on the product. 
D)  Firms pay the entire tax on the product.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Petrol taxes that are typically used for highway construction and maintenance are consistent with which of the following principles of taxation?

Accepted Answer

A)  The ability-to-pay principle 
B)  The horizontal-equity principle 
C)  The vertical-equity principle 
D)  The benefits-received principle 
A)  The ability-to-pay principle 
B)  The horizontal-equity principle 
C)  The vertical-equity principle 
D)  The benefits-received principle

Question 9

Figure 12.2   Figure 12.2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 12.2.If the government imposes an excise tax of $1.00 on every unit sold,the producer's burden of the tax

Accepted Answer

A)  is greater under the more elastic supply curve S0. 
B)  is greater under the less elastic supply curve S0. 
C)  is greater under the less elastic supply curve S1. 
D)  is the same under either supply curve because there is a single demand curve that captures buyers' market behaviour. 
A)  is greater under the more elastic supply curve S0. 
B)  is greater under the less elastic supply curve S0. 
C)  is greater under the less elastic supply curve S1. 
D)  is the same under either supply curve because there is a single demand curve that captures buyers' market behaviour.

Question 10

What is the poverty rate?

Accepted Answer

A)  the rate at which the number of people relative to the size of the population fall below the poverty line 
B)  the percentage of the population earning an annual income below the poverty line, according to the federal government's definition 
C)  the percentage of working adults whose annual income is sufficiently low as to be exempt from paying income taxes 
D)  the percentage of households who qualify for government assistance to meet the minimal requirement for adequate nutrition 
A)  the rate at which the number of people relative to the size of the population fall below the poverty line 
B)  the percentage of the population earning an annual income below the poverty line, according to the federal government's definition 
C)  the percentage of working adults whose annual income is sufficiently low as to be exempt from paying income taxes 
D)  the percentage of households who qualify for government assistance to meet the minimal requirement for adequate nutrition

Question 11

The idea that two taxpayers in the same economic circumstances should pay the same level of taxes is known as the -.

Accepted Answer

A)  ability-to-pay principle 
B)  vertical-equity principle 
C)  horizontal-equity principle 
D)  benefits-received principle 
A)  ability-to-pay principle 
B)  vertical-equity principle 
C)  horizontal-equity principle 
D)  benefits-received principle

Question 12

What happens as the value of the Gini coefficient approaches one?

Accepted Answer

A)  Income distribution becomes more unequal. 
B)  Income distribution becomes less unequal. 
C)  The percentage of the population under the poverty line increases. 
D)  The percentage of the population under the poverty line decreases. 
A)  Income distribution becomes more unequal. 
B)  Income distribution becomes less unequal. 
C)  The percentage of the population under the poverty line increases. 
D)  The percentage of the population under the poverty line decreases.

Question 13

Holding all other factors constant,income earned from capital is more unequally distributed than income earned from labour.

Accepted Answer

A) True 
 B)False

Question 14

As a group,people with high incomes are likely to have

Accepted Answer

A)  greater-than-average family inheritances and greater-than-average SAT scores. 
B)  greater-than-average holdings of stocks and bonds and lower-than-average productivity. 
C)  greater-than-average productivity and greater-than-average amounts of capital. 
D)  a stable marriage and no children. 
A)  greater-than-average family inheritances and greater-than-average SAT scores. 
B)  greater-than-average holdings of stocks and bonds and lower-than-average productivity. 
C)  greater-than-average productivity and greater-than-average amounts of capital. 
D)  a stable marriage and no children.

Question 15

If,as your taxable income decreases,you pay a smaller percentage of your taxable income in taxes,then the tax is -.

Accepted Answer

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

Question 16

The poverty rate is defined as the percentage of the

Accepted Answer

A)  labour force that is poor according to the federal government's definition of poverty. 
B)  population that is exempt from paying federal income taxes. 
C)  population who qualify to receive welfare payments. 
D)  population that is poor according to the federal government's definition of poverty. 
A)  labour force that is poor according to the federal government's definition of poverty. 
B)  population that is exempt from paying federal income taxes. 
C)  population who qualify to receive welfare payments. 
D)  population that is poor according to the federal government's definition of poverty.

Question 17

If you pay $14 000 in taxes on an income of $125 000,and $17 400 in taxes on an income of $144 000,what is your marginal tax rate? Show your work.
--------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------

Accepted Answer

Marginal tax rate =

Question 18

Foreign investment can give a low-income country

Accepted Answer

A)  access to funds for investment and access to technology. 
B)  the means to slow down growth. 
C)  a path to dependency and low growth. 
D)  no hope to break the vicious cycle of poverty. 
A)  access to funds for investment and access to technology. 
B)  the means to slow down growth. 
C)  a path to dependency and low growth. 
D)  no hope to break the vicious cycle of poverty.

Question 19

Figure 12.1  
-Refer to Figure 12.1.Of the tax revenue collected by the government,the portion borne by producers is represented by the area -.

Accepted Answer

A)  B + C 
B)  F + G 
C)  E + H 
D)  B + C + F + G 
A)  B + C 
B)  F + G 
C)  E + H 
D)  B + C + F + G

Question 20

Figure 12.6   Figure 12.6 shows the Lorenz curves for Islandia and Syldavia.
-Refer to Figure 12.6.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

If the government wants to minimise the welfare loss of a tax,it should tax goods with more inelastic demands or supplies.

The horizontal-equity principle of taxation is not easy to use in practice because

A marginal tax rate is

Consider a public good such as fire protection services.Rich people may benefit more than the poor from such a service because rich people stand to lose more from a fire that destroys property.In this case,

Figure 12.2 Figure 12.2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 12.2.If the government imposes an excise tax of $1.00 on every unit sold,

What happens when the demand for a product is more elastic than the supply?

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

Petrol taxes that are typically used for highway construction and maintenance are consistent with which of the following principles of taxation?

Figure 12.2 Figure 12.2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 12.2.If the government imposes an excise tax of $1.00 on every unit sold,the producer's burden of the tax

What is the poverty rate?

The idea that two taxpayers in the same economic circumstances should pay the same level of taxes is known as the -.

What happens as the value of the Gini coefficient approaches one?

Holding all other factors constant,income earned from capital is more unequally distributed than income earned from labour.

As a group,people with high incomes are likely to have

If,as your taxable income decreases,you pay a smaller percentage of your taxable income in taxes,then the tax is -.

The poverty rate is defined as the percentage of the

Foreign investment can give a low-income country

Figure 12.1 -Refer to Figure 12.1.Of the tax revenue collected by the government,the portion borne by producers is represented by the area -.

Figure 12.6 Figure 12.6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 12.6.If area X = 2060,area Y = 240,and area Z= 2700,calculate the Gini coefficient for Syldavia.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

Exam 12: Social Policy and Inequality

If the government wants to minimise the welfare loss of a tax,it should tax goods with more inelastic demands or supplies.

The horizontal-equity principle of taxation is not easy to use in practice because

A marginal tax rate is

Consider a public good such as fire protection services.Rich people may benefit more than the poor from such a service because rich people stand to lose more from a fire that destroys property.In this case,

Figure 12.2 Figure 12.2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 12.2.If the government imposes an excise tax of $1.00 on every unit sold,

What happens when the demand for a product is more elastic than the supply?

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

Petrol taxes that are typically used for highway construction and maintenance are consistent with which of the following principles of taxation?

Figure 12.2 Figure 12.2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 12.2.If the government imposes an excise tax of $1.00 on every unit sold,the producer's burden of the tax

What is the poverty rate?

The idea that two taxpayers in the same economic circumstances should pay the same level of taxes is known as the -.

What happens as the value of the Gini coefficient approaches one?

Holding all other factors constant,income earned from capital is more unequally distributed than income earned from labour.

As a group,people with high incomes are likely to have

If,as your taxable income decreases,you pay a smaller percentage of your taxable income in taxes,then the tax is -.

The poverty rate is defined as the percentage of the

Foreign investment can give a low-income country

Figure 12.1 -Refer to Figure 12.1.Of the tax revenue collected by the government,the portion borne by producers is represented by the area -.

Figure 12.6 Figure 12.6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 12.6.If area X = 2060,area Y = 240,and area Z= 2700,calculate the Gini coefficient for Syldavia.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters