Question 1

It is more likely at lower tax rates than higher tax rates that the:

Accepted Answer

A)   quantity effect will outweigh the price effect.
B)   quantity effect will outweigh the income effect.
C)   price effect will outweigh the quantity effect.
D)   income effect will outweigh the price effect.E) A) and C)
F) A) and D) C

Question 2

When a tax is imposed,the surplus that is lost to buyers and sellers but converted into tax revenue is:

Accepted Answer

A)   transferred to others through public programs.
B)   lost and considered a cost of taxation.
C)   part of deadweight loss.
D)   All of these statements are true.E) A) and C)
F) A) and D)

Question 3

In general,the more equitable the incidence of a tax system is the:

Accepted Answer

A)   less complicated and more efficient is its design
B)   more complicated and less efficient is its design.
C)   more complicated and more efficient is its design.
D)   less complicated and less efficient is its design.E) B) and D)
F) C) and D)

Question 4

The statutory incidence of the tax means who:

Accepted Answer

A)   is legally obligated to pay the tax to the government.
B)   actually loses surplus as a result of the tax.
C)   bears the burden of any sort of tax.
D)   gains surplus as a result of the government redistributing tax revenue.E) C) and D)
F) None of the above A

Question 5

For a person earning $15,000,the average tax rate is:

Accepted Answer

A)   10%
B)   15%
C)   12.5%
D)   11.7%E) A) and B)
F) None of the above

Question 6

One interesting feature of federal government spending in the United States is that:

Accepted Answer

A)   it has historically always been greater than the revenues generated.
B)   little of it is discretionary.
C)   the majority of it is discretionary.
D)   it has historically always been less than the revenues generated, until the last 20 years.E) A) and B)
F) All of the above

Question 7

Over 90 percent of the U.S.government's tax revenues come from:

Accepted Answer

A)   two sources.
B)   one single source.
C)   three sources.
D)   None of these is true.E) A) and D)
F) B) and C)

Question 8

A helpful way to put government revenues into context is to think about it:

Accepted Answer

A)   as an average amount paid per taxpayer.
B)   as a percentage of the country's GDP.
C)   by comparing the percentage of a country's GDP collected in taxes to other countries' percentage of GDP.
D)   All of these approaches can be helpful in understanding tax revenues.E) A) and B)
F) C) and D)

Question 9

The side of the market that will bear a greater share of the tax burden is the side that:

Accepted Answer

A)   responds more to a change in prices.
B)   is more inelastic.
C)   changes quantity by a larger percentage when the price changes by a given percentage.
D)   bears the statutory burden of the tax.E) A) and B)
F) B) and C)

Question 10

A tax that is levied in such a way that low-income taxpayers pay a greater proportion of their income toward taxes than do high-income taxpayers is called a:

Accepted Answer

A)   proportional tax.
B)   progressive tax.
C)   regressive tax.
D)   flat tax.E) All of the above
F) B) and D)

Question 11

A payroll tax is a tax on the:

Accepted Answer

A)   earnings of individuals.
B)   income earned by buying investments and selling them at a higher price.
C)   wages paid to an employee.
D)   value of a good or service being purchased.E) B) and C)
F) A) and B)

Question 12

A proportional tax:

Accepted Answer

A)   takes the same percentage of taxes from income from all taxpayers.
B)   requires those with low incomes to pay a smaller percentage of their income than high-income people.
C)   is levied so that low-income taxpayers pay a greater proportion of their income toward taxes than high-income taxpayers.
D)   taxes everyone the same amount, regardless of their income.E) C) and D)
F) A) and B)

Question 13

In general,more efficient taxes have:

Accepted Answer

A)   lower administrative burdens.
B)   more complexity.
C)   lower revenues given the size of the tax.
D)   All of these statements are true.E) C) and D)
F) All of the above

Question 14

The administrative burden of taxes is:

Accepted Answer

A)   smallest with a lump-sum tax.
B)   the same if the revenue generated is the same for any kind of tax.
C)   smaller the larger the amount of the tax.
D)   the same across all types of taxes.E) B) and C)
F) C) and D)

Question 15

The largest source of income for most people is:

Accepted Answer

A)   income from interest in savings accounts.
B)   wages earned at work.
C)   rental income from properties that they own.
D)   investment income.E) All of the above
F) A) and B)

Question 16

1 to D2.The amount of the tax imposed in the graph shown is equal to: A)  (P1 P3) . B)  (P2 P1) . C)  (P4 P2) . D)  (P4 P3) ." class="answers-bank-image d-inline" rel="preload" > This graph depicts a tax being imposed,causing demand to shift from D1 to D2.The amount of the tax imposed in the graph shown is equal to:

Accepted Answer

A)   (P1 P3) .
B)   (P2 P1) .
C)   (P4 P2) .
D)   (P4 P3) .E) B) and D)
F) A) and D)

Question 17

In deciding which programs the government should fund with tax revenues there is:

Accepted Answer

A)   perfect consensus before a program is funded.
B)   often widespread disagreement.
C)   always a popular vote for new programs.
D)   the ability of each individual to decide where his tax dollars are spent.E) B) and C)
F) A) and B)

Question 18

A $0.50 tax on lemons currently generates $200 in revenues per day.If the tax were increased to $2,the revenues generated would drop to $70.This tells you that in this range of tax rates the:

Accepted Answer

A)   quantity effect outweighs the price effect.
B)   quantity effect outweighs the income effect.
C)   price effect outweighs the quantity effect.
D)   price effect outweighs the income effect.E) A) and D)
F) B) and C)

Question 19

A tax that requires those with low incomes to pay a smaller percentage of their income than high-income earners is a:

Accepted Answer

A)   proportional tax.
B)   progressive tax.
C)   regressive tax.
D)   flat tax.E) B) and C)
F) A) and C) B

Question 20

A regressive tax:

Accepted Answer

A)   takes the same percentage of taxes from income from all taxpayers.
B)   requires those with low incomes to pay a smaller percentage of their income than high-income people.
C)   is levied so that low-income taxpayers pay a greater proportion of their income toward taxes than high-income taxpayers.
D)   taxes everyone the same amount, regardless of their income.E) B) and D)
F) C) and D)

Exam 20: Taxation and the Public Budget

It is more likely at lower tax rates than higher tax rates that the:

Correct AnswerverifiedC

When a tax is imposed,the surplus that is lost to buyers and sellers but converted into tax revenue is:

Correct AnswerverifiedShow Answer

In general,the more equitable the incidence of a tax system is the:

Correct AnswerverifiedShow Answer

The statutory incidence of the tax means who:

Correct AnswerverifiedA

For a person earning $15,000,the average tax rate is:

Correct AnswerverifiedShow Answer

One interesting feature of federal government spending in the United States is that:

Correct AnswerverifiedShow Answer

Over 90 percent of the U.S.government's tax revenues come from:

Correct AnswerverifiedShow Answer

A helpful way to put government revenues into context is to think about it:

Correct AnswerverifiedShow Answer

The side of the market that will bear a greater share of the tax burden is the side that:

Correct AnswerverifiedShow Answer

A tax that is levied in such a way that low-income taxpayers pay a greater proportion of their income toward taxes than do high-income taxpayers is called a:

Correct AnswerverifiedShow Answer

A payroll tax is a tax on the:

Correct AnswerverifiedShow Answer

A proportional tax:

Correct AnswerverifiedShow Answer

In general,more efficient taxes have:

Correct AnswerverifiedShow Answer

The administrative burden of taxes is:

Correct AnswerverifiedShow Answer

The largest source of income for most people is:

Correct AnswerverifiedShow Answer

This graph depicts a tax being imposed,causing demand to shift from D1 to D2.The amount of the tax imposed in the graph shown is equal to:

Correct AnswerverifiedShow Answer

In deciding which programs the government should fund with tax revenues there is:

Correct AnswerverifiedShow Answer

A $0.50 tax on lemons currently generates $200 in revenues per day.If the tax were increased to $2,the revenues generated would drop to $70.This tells you that in this range of tax rates the:

Correct AnswerverifiedShow Answer

A tax that requires those with low incomes to pay a smaller percentage of their income than high-income earners is a:

Correct AnswerverifiedB

A regressive tax:

Correct AnswerverifiedShow Answer

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C

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A

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This graph depicts a tax being imposed,causing demand to shift from D₁ to D₂.The amount of the tax imposed in the graph shown is equal to:

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B

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