Question 1

An example of a transfer payment is

Accepted Answer

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

Question 2

Vertical-equity is most closely associated with which of the following goals or principles?

Accepted Answer

A)  The horizontal-equity principle 
B)  The goal of economic efficiency 
C)  The goal of attaining social objectives 
D)  The ability-to-pay principle 
A)  The horizontal-equity principle 
B)  The goal of economic efficiency 
C)  The goal of attaining social objectives 
D)  The ability-to-pay principle

Question 3

Figure 12.7   Figure 12.7 shows the Lorenz curve for a hypothetical country.
-Refer to Figure 12.7.The second lowest 20 per cent of households

Accepted Answer

A)  earn 12 per cent of the society's total income. 
B)  earn 16 per cent of the society's total income. 
C)  earn 28 per cent of the society's total income. 
D)  earn 40 per cent of the society's total income. 
A)  earn 12 per cent of the society's total income. 
B)  earn 16 per cent of the society's total income. 
C)  earn 28 per cent of the society's total income. 
D)  earn 40 per cent of the society's total income.

Question 4

The term 'payroll taxes' is often used to refer to

Accepted Answer

A)  individual income taxes that are withheld from paychecks. 
B)  corporate income taxes. 
C)  Social Security and Medicare taxes. 
D)  sales taxes. 
A)  individual income taxes that are withheld from paychecks. 
B)  corporate income taxes. 
C)  Social Security and Medicare taxes. 
D)  sales taxes.

Question 5

Figure 12.1  
-Refer to Figure 12.1.Of the tax revenue collected by the government,the portion borne by consumers 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 6

A Gini coefficient of ________ means that an income distribution is perfectly equal and a Gini coefficient of ________ means the income distribution is perfectly unequal.

Accepted Answer

A)  0; 1 
B)  1; 0 
C)  0; 100 
D)  100; 0 
A)  0; 1 
B)  1; 0 
C)  0; 100 
D)  100; 0

Question 7

The person or firm that pays a tax bears the burden of the tax.

Accepted Answer

A) True 
 B)False

Question 8

What is the difference between a marginal tax rate and an average tax rate? Which is more important in determining the impact of the tax system on economic behaviour?
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Accepted Answer

A marginal tax rate is the fraction of e

Question 9

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 10

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

Accepted Answer

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

Question 11

If you pay $3000 in taxes on an income of $30 000,and a tax of $3600 on an income of $40 000,then over this range of income the tax is -.

Accepted Answer

A)  regressive 
B)  proportional 
C)  progressive 
D)  There is insufficient information to answer the question. 
A)  regressive 
B)  proportional 
C)  progressive 
D)  There is insufficient information to answer the question.

Question 12

A Lorezo curve illustrates

Accepted Answer

A)  a comparison of the distribution of income in two different countries. 
B)  the share of taxes paid by different groups of households. 
C)  the distribution of income within a country in a given time period. 
D)  the change over time in the percentage of households with incomes that place them below the poverty line. 
A)  a comparison of the distribution of income in two different countries. 
B)  the share of taxes paid by different groups of households. 
C)  the distribution of income within a country in a given time period. 
D)  the change over time in the percentage of households with incomes that place them below the poverty line.

Question 13

Your friend is opposed to globalisation for environmental reasons.Outline for your friend,the positive economic aspects of globalisation.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Globalisation is the process of countrie

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

'Sin taxes,' such as taxes on alcoholic beverages,are intended to

Accepted Answer

A)  increase the amount of the products supplied. 
B)  generate money to subsidise production of the products taxed. 
C)  reduce the quantity demanded. 
D)  generate funds to aid in the medical care of those harmed by the product. 
A)  increase the amount of the products supplied. 
B)  generate money to subsidise production of the products taxed. 
C)  reduce the quantity demanded. 
D)  generate funds to aid in the medical care of those harmed by the product.

Question 16

According to the benefits-received principle,those who receive the benefits from a government program should pay the taxes that support the program.

Accepted Answer

A) True 
 B)False

Question 17

Exempting food purchases from sales tax is consistent with the ability-to-pay principle,although not necessarily consistent with vertical equity.

Accepted Answer

A) True 
 B)False

Question 18

If you pay $2000 in taxes on an income of $30 000,and a tax of $4000 on an income of $40 000,then over this range of income the tax is -.

Accepted Answer

A)  regressive 
B)  proportional 
C)  progressive 
D)  There is insufficient information to answer the question. 
A)  regressive 
B)  proportional 
C)  progressive 
D)  There is insufficient information to answer the question.

Question 19

The 'ability-to-pay' principle of taxation is the normative idea that

Accepted Answer

A)  an equitable tax system is one in which high-income individuals should bear a greater burden of taxes than low-income individuals. 
B)  each individual should voluntarily contribute according to her ability to pay taxes. 
C)  progressive taxes are more equitable than regressive taxes. 
D)  two individuals earning the same income should have equal ability to pay, all else constant. 
A)  an equitable tax system is one in which high-income individuals should bear a greater burden of taxes than low-income individuals. 
B)  each individual should voluntarily contribute according to her ability to pay taxes. 
C)  progressive taxes are more equitable than regressive taxes. 
D)  two individuals earning the same income should have equal ability to pay, all else constant.

Question 20

If the government is most interested in minimising excess burden of an excise tax,should it impose the tax on goods that are elastic or on goods that are inelastic?
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Accepted Answer

If the government wants to min

An example of a transfer payment is

Vertical-equity is most closely associated with which of the following goals or principles?

Figure 12.7 Figure 12.7 shows the Lorenz curve for a hypothetical country. -Refer to Figure 12.7.The second lowest 20 per cent of households

The term 'payroll taxes' is often used to refer to

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

A Gini coefficient of means that an income distribution is perfectly equal and a Gini coefficient of means the income distribution is perfectly unequal.

The person or firm that pays a tax bears the burden of the tax.

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

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

If you pay $3000 in taxes on an income of $30 000,and a tax of $3600 on an income of $40 000,then over this range of income the tax is -.

A Lorezo curve illustrates

Your friend is opposed to globalisation for environmental reasons.Outline for your friend,the positive economic aspects of globalisation. _ _

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?

'Sin taxes,' such as taxes on alcoholic beverages,are intended to

According to the benefits-received principle,those who receive the benefits from a government program should pay the taxes that support the program.

Exempting food purchases from sales tax is consistent with the ability-to-pay principle,although not necessarily consistent with vertical equity.

If you pay $2000 in taxes on an income of $30 000,and a tax of $4000 on an income of $40 000,then over this range of income the tax is -.

The 'ability-to-pay' principle of taxation is the normative idea that

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

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Exam 12: Social Policy and Inequality

An example of a transfer payment is

Vertical-equity is most closely associated with which of the following goals or principles?

Figure 12.7 Figure 12.7 shows the Lorenz curve for a hypothetical country. -Refer to Figure 12.7.The second lowest 20 per cent of households

The term 'payroll taxes' is often used to refer to

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

A Gini coefficient of ________ means that an income distribution is perfectly equal and a Gini coefficient of ________ means the income distribution is perfectly unequal.

The person or firm that pays a tax bears the burden of the tax.

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

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

If you pay $3000 in taxes on an income of $30 000,and a tax of $3600 on an income of $40 000,then over this range of income the tax is -.

A Lorezo curve illustrates

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?

'Sin taxes,' such as taxes on alcoholic beverages,are intended to

According to the benefits-received principle,those who receive the benefits from a government program should pay the taxes that support the program.

Exempting food purchases from sales tax is consistent with the ability-to-pay principle,although not necessarily consistent with vertical equity.

If you pay $2000 in taxes on an income of $30 000,and a tax of $4000 on an income of $40 000,then over this range of income the tax is -.

The 'ability-to-pay' principle of taxation is the normative idea that

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

A Gini coefficient of means that an income distribution is perfectly equal and a Gini coefficient of means the income distribution is perfectly unequal.