Question 1

In designing taxes, the government economists might focus on the following goals, except

Accepted Answer

A)  minimizing efficiency losses.
B)  redistributing income or wealth from one group to another.
C)  reducing the negative externalities of certain activities.
D)  simplifying the estimation of demand elasticities that are relevant to tax incidence.E) A) and D)
F) None of the above

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.E) A) and B)
F) None of the above

Question 3

The Social Security tax is regressive because it applies only on income below a "cap" income level.

Accepted Answer

A) True 
 B)False

Question 4

The tax that is most difficult to shift to others would be

Accepted Answer

A)  the personal income tax.
B)  the corporate income tax.
C)  specific excise taxes.
D)  business property taxes.E) All of the above
F) A) and B)

Question 5

The largest source of tax revenue for state governments is the property tax.

Accepted Answer

A) True 
 B)False

Question 6

The actual incidence of payroll taxes, in the consensus view, is

Accepted Answer

A)  split evenly between the worker and the employer.
B)  more on the employer than on the worker.
C)  more on the worker than on the employer.
D)  all on the employer, who remits the tax to the government.E) B) and D)
F) All of the above

Question 7

Education is the largest expenditure item for state governments as well as local governments in the U.S.

Accepted Answer

A) True 
 B)False

Question 8

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of supply of X is unitary (coefficient = 1) .If the incidence of the tax is such that the consumers of X pay $1.85 of the tax and the producers pay $0.15, we can conclude that the

Accepted Answer

A)  supply of X is highly inelastic.
B)  supply of X is highly elastic.
C)  demand for X is highly inelastic.
D)  demand for X is highly elastic.E) None of the above
F) A) and B)

Question 9

The Social Security tax is regressive because

Accepted Answer

A)  the Social Security tax rate applied does not rise with the salary level.
B)  no Social Security tax is collected for incomes in excess of a "cap" income level.
C)  each individual must pay a set percentage of his or her income in Social Security taxes.
D)  as income increases, the Social Security tax rate increases at a decreasing rate.E) All of the above
F) A) and D)

Question 10

A nationâ€™s "tax burden" is measured by the

Accepted Answer

A)  total amount of tax dollars paid by the citizens.
B)  average tax rate on taxable income in the nation.
C)  governmentâ€™s tax revenues as a percentage of GDP.
D)  average of personal-income and corporate-income tax rates.E) A) and B)
F) B) and C)

Question 11

Tax shifting refers to the fact that

Accepted Answer

A)  sellers will try to pass the burden of an excise tax on to the buyers.
B)  high-income groups tend to pay a higher average tax rate than low-income groups.
C)  as one earns a higher income, one shifts to a high tax bracket.
D)  a nation can sometimes shift from a progressive tax structure to one that is regressive.E) A) and B)
F) A) and C)

Question 12

Public finance is the subdiscipline of economics that studies the various ways in which

Accepted Answer

A)  the general public acquire financing for their purchases.
B)  governments raise and expend money.
C)  firms in the financial sector provide services to households and firms.
D)  governments may regulate and promote the stability of the financial sector.E) B) and C)
F) B) and D)

Question 13

Although state and local taxes are highly progressive, federal taxation is predominantly regressive.

Accepted Answer

A) True 
 B)False

Question 14

In 2015, personal income taxes contributed what percentage of total federal tax revenues in the U.S.?

Accepted Answer

A)  close to 50 percent
B)  between 60 percent and 70 percent
C)  about 33 percent
D)  around 90 percentE) A) and B)
F) B) and D)

Question 15

Government assumes some responsibility for providing a minimum standard of living for all citizens to compensate for the increase in income inequality caused by government tax revenues and expenditures.

Accepted Answer

A) True 
 B)False

Question 16

The marginal tax rate is the

Accepted Answer

A)  sum of all individual tax rates.
B)  tax rate paid by those with the lowest family incomes.
C)  total amount of taxes paid as a percentage of total income.
D)  increase in taxes as a percentage of an increase in income.E) None of the above
F) A) and B)

Question 17

The largest source of local government's revenue is the sales tax.

Accepted Answer

A) True 
 B)False

Question 18

Overall, the U.S.tax system (combined federal, state, and local)  is

Accepted Answer

A)  highly progressive.
B)  slightly progressive.
C)  slightly regressive.
D)  highly regressive.E) B) and C)
F) A) and D)

Question 19

The federal gasoline tax is assessed on a per-gallon basis, and the proceeds are used for highway maintenance and improvements.This tax is consistent with the

Accepted Answer

A)  ability-to-pay principle of taxation.
B)  benefits-received principle of taxation.
C)  single-tax theory of taxation.
D)  pay-as-you-go theory of taxation.E) C) and D)
F) B) and C)

Question 20

When the government is doing "deficit spending," it will be increasing its total debt.

Accepted Answer

A) True 
 B)False

Exam 20: Public Finance: Expenditures and Taxes

Government assumes some responsibility for providing a minimum standard of living for all citizens to compensate for the increase in income inequality caused by government tax revenues and expenditures.

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Public finance is the subdiscipline of economics that studies the various ways in which

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When the government is doing "deficit spending," it will be increasing its total debt.

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A nationâ€™s "tax burden" is measured by the

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With respect to local finance,

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Tax shifting refers to the fact that

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In designing taxes, the government economists might focus on the following goals, except

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The tax that is most difficult to shift to others would be

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The federal gasoline tax is assessed on a per-gallon basis, and the proceeds are used for highway maintenance and improvements.This tax is consistent with the

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The largest source of local government's revenue is the sales tax.

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The Social Security tax is regressive because

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The marginal tax rate is the

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Overall, the U.S.tax system (combined federal, state, and local) is

Correct AnswerverifiedShow Answer

Although state and local taxes are highly progressive, federal taxation is predominantly regressive.

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The largest source of tax revenue for state governments is the property tax.

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The Social Security tax is regressive because it applies only on income below a "cap" income level.

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Education is the largest expenditure item for state governments as well as local governments in the U.S.

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In 2015, personal income taxes contributed what percentage of total federal tax revenues in the U.S.?

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Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of supply of X is unitary (coefficient = 1) .If the incidence of the tax is such that the consumers of X pay $1.85 of the tax and the producers pay $0.15, we can conclude that the

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The actual incidence of payroll taxes, in the consensus view, is

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