Question 1

Head Start is a program that gives interest-free loans to poor people to help them start their own businesses.

Accepted Answer

A) True 
 B)False  False

Question 2

Exhibit 14-1  
-Refer to Exhibit 14-1. An individual making $75,000 pays an average tax rate of

Accepted Answer

A)  40 percent. 
B)  15 percent. 
C)  27 percent. 
D)  35 percent. 
E)  30 percent. 
A)  40 percent. 
B)  15 percent. 
C)  27 percent. 
D)  35 percent. 
E)  30 percent. C

Question 3

The amount of income tax that must be paid on an additional dollar of income is determined by the

Accepted Answer

A)  total tax rate. 
B)  highest tax rate. 
C)  payroll tax rate. 
D)  marginal tax rate. 
E)  average tax rate. 
A)  total tax rate. 
B)  highest tax rate. 
C)  payroll tax rate. 
D)  marginal tax rate. 
E)  average tax rate. D

Question 4

Many politicians argue against taxing home heating oil because it is a regressive tax. Explain. If the demand for heating oil is very elastic, what happens to the quantity demanded after the tax is imposed? Who will bear most of the burden of the tax in this case?

Accepted Answer

A tax on home heating oil will be regres

Question 5

A flat tax system that allows for exemptions and deductions is a

Accepted Answer

A)  regressive tax. 
B)  zero tax. 
C)  constant tax. 
D)  proportional tax. 
E)  progressive tax. 
A)  regressive tax. 
B)  zero tax. 
C)  constant tax. 
D)  proportional tax. 
E)  progressive tax.

Question 6

Exhibit 14-2  
-Refer to Exhibit 14-2. At a tax rate between 50 percent and 100 percent, a small reduction in the tax rate results in ____ in tax revenue.

Accepted Answer

A)  an increase 
B)  a decrease 
C)  no change 
D)  a decrease and then an increase 
E)  either an increase or a decrease 
A)  an increase 
B)  a decrease 
C)  no change 
D)  a decrease and then an increase 
E)  either an increase or a decrease

Question 7

The farther the Lorenz curve bows down away from the line of income equality, the

Accepted Answer

A)  greater the inequality of the distribution of income. 
B)  more even the income distribution. 
C)  more proportional the income distribution. 
D)  less likely the economy is to maintain its equilibrium. 
E)  greater the need for redistributive taxation. 
A)  greater the inequality of the distribution of income. 
B)  more even the income distribution. 
C)  more proportional the income distribution. 
D)  less likely the economy is to maintain its equilibrium. 
E)  greater the need for redistributive taxation.

Question 8

Because of work disincentives, government transfer and tax policies have increased the inequality of income in the United States.

Accepted Answer

A) True 
 B)False

Question 9

In the case of a per-unit tax on a good, which of the following situations will lead to the greatest change in price?

Accepted Answer

A)  Supply and demand are relatively inelastic. 
B)  Supply and demand are relatively elastic. 
C)  Demand is relatively elastic and supply is relatively inelastic. 
D)  Demand is relatively inelastic and supply is relatively elastic. 
E)  Both supply and demand do not exist. 
A)  Supply and demand are relatively inelastic. 
B)  Supply and demand are relatively elastic. 
C)  Demand is relatively elastic and supply is relatively inelastic. 
D)  Demand is relatively inelastic and supply is relatively elastic. 
E)  Both supply and demand do not exist.

Question 10

The number of people living below the poverty line divided by the total number of people in a nation is the nation's

Accepted Answer

A)  poverty rate. 
B)  starving ratio. 
C)  hardship rate. 
D)  poverty ratio. 
E)  poor rate. 
A)  poverty rate. 
B)  starving ratio. 
C)  hardship rate. 
D)  poverty ratio. 
E)  poor rate.

Question 11

The table below gives hours worked per month and welfare payments received.

Accepted Answer

The answer of The table below gives hours worked per...

Question 12

Which of the following statements concerning the income distribution in the world is true?

Accepted Answer

A)  Bangladesh has a less equal distribution of income than the United States. 
B)  The Gini coefficient for the world as a whole is larger than it is for many nations. 
C)  The distribution of income in undeveloped nations varies less than it does in developed nations. 
D)  Most European countries have more equal distributions of income than the United States. 
E)  The poorer a nation, the more equal the distribution of income. 
A)  Bangladesh has a less equal distribution of income than the United States. 
B)  The Gini coefficient for the world as a whole is larger than it is for many nations. 
C)  The distribution of income in undeveloped nations varies less than it does in developed nations. 
D)  Most European countries have more equal distributions of income than the United States. 
E)  The poorer a nation, the more equal the distribution of income.

Question 13

With a proportional tax, the average tax rate and marginal tax rate are equal.

Accepted Answer

A) True 
 B)False

Question 14

The Gini coefficient is computed by

Accepted Answer

A)  multiplying the area between the line of equality and the Lorenz curve by the area below the line of equality. 
B)  dividing the area between the Lorenz curve and the line of equality by the area below the line of equality. 
C)  subtracting the area between the line of equality and the Lorenz curve from the area below the line of equality. 
D)  dividing the length of the line of equality by the length of the Lorenz curve. 
E)  dividing the area between the Lorenz curve and the line of equality by the area below the Lorenz curve. 
A)  multiplying the area between the line of equality and the Lorenz curve by the area below the line of equality. 
B)  dividing the area between the Lorenz curve and the line of equality by the area below the line of equality. 
C)  subtracting the area between the line of equality and the Lorenz curve from the area below the line of equality. 
D)  dividing the length of the line of equality by the length of the Lorenz curve. 
E)  dividing the area between the Lorenz curve and the line of equality by the area below the Lorenz curve.

Question 15

Of the two classes of participants in a market, buyers and sellers, the one who pays most of an excise tax is the one with the greater elasticity.

Accepted Answer

A) True 
 B)False

Question 16

Suppose a country is concerned about providing adequate incentives for entrepreneurs. What type of tax system should be implemented, progressive or flat?

Accepted Answer

The country should implement a flat tax.

Question 17

Property taxes are the largest sources of revenue for local governments.

Accepted Answer

A) True 
 B)False

Question 18

Exhibit 14-1  
-Refer to Exhibit 14-1. If an individual's taxable income is $75,000, how much income tax will that individual have to pay?

Accepted Answer

A)  $26,250 
B)  $22,500 
C)  $21,000 
D)  $20,000 
E)  $11,250 
A)  $26,250 
B)  $22,500 
C)  $21,000 
D)  $20,000 
E)  $11,250

Question 19

A program designed to help people who are out of work is

Accepted Answer

A)  food stamps. 
B)  unemployment insurance. 
C)  housing assistance. 
D)  social security. 
E)  supplemental security income. 
A)  food stamps. 
B)  unemployment insurance. 
C)  housing assistance. 
D)  social security. 
E)  supplemental security income.

Question 20

Under what circumstance would an increase in the payroll tax paid by employers cause the wage to fall by the same percentage as the tax increase, regardless of the labor supply curve's elasticity?

Accepted Answer

This scenario would

Head Start is a program that gives interest-free loans to poor people to help them start their own businesses.

Exhibit 14-1 -Refer to Exhibit 14-1. An individual making $75,000 pays an average tax rate of

The amount of income tax that must be paid on an additional dollar of income is determined by the

Many politicians argue against taxing home heating oil because it is a regressive tax. Explain. If the demand for heating oil is very elastic, what happens to the quantity demanded after the tax is imposed? Who will bear most of the burden of the tax in this case?

A flat tax system that allows for exemptions and deductions is a

Exhibit 14-2 -Refer to Exhibit 14-2. At a tax rate between 50 percent and 100 percent, a small reduction in the tax rate results in ____ in tax revenue.

The farther the Lorenz curve bows down away from the line of income equality, the

Because of work disincentives, government transfer and tax policies have increased the inequality of income in the United States.

In the case of a per-unit tax on a good, which of the following situations will lead to the greatest change in price?

The number of people living below the poverty line divided by the total number of people in a nation is the nation's

The table below gives hours worked per month and welfare payments received.

Which of the following statements concerning the income distribution in the world is true?

With a proportional tax, the average tax rate and marginal tax rate are equal.

The Gini coefficient is computed by

Of the two classes of participants in a market, buyers and sellers, the one who pays most of an excise tax is the one with the greater elasticity.

Suppose a country is concerned about providing adequate incentives for entrepreneurs. What type of tax system should be implemented, progressive or flat?

Property taxes are the largest sources of revenue for local governments.

Exhibit 14-1 -Refer to Exhibit 14-1. If an individual's taxable income is $75,000, how much income tax will that individual have to pay?

A program designed to help people who are out of work is

Under what circumstance would an increase in the payroll tax paid by employers cause the wage to fall by the same percentage as the tax increase, regardless of the labor supply curve's elasticity?

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Reading, Understanding, and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Filters

Exam 14: Taxes, Transfers, and Income Distribution

Head Start is a program that gives interest-free loans to poor people to help them start their own businesses.

Exhibit 14-1 -Refer to Exhibit 14-1. An individual making $75,000 pays an average tax rate of

The amount of income tax that must be paid on an additional dollar of income is determined by the

Many politicians argue against taxing home heating oil because it is a regressive tax. Explain. If the demand for heating oil is very elastic, what happens to the quantity demanded after the tax is imposed? Who will bear most of the burden of the tax in this case?

A flat tax system that allows for exemptions and deductions is a

Exhibit 14-2 -Refer to Exhibit 14-2. At a tax rate between 50 percent and 100 percent, a small reduction in the tax rate results in ____ in tax revenue.

The farther the Lorenz curve bows down away from the line of income equality, the

Because of work disincentives, government transfer and tax policies have increased the inequality of income in the United States.

In the case of a per-unit tax on a good, which of the following situations will lead to the greatest change in price?

The number of people living below the poverty line divided by the total number of people in a nation is the nation's

The table below gives hours worked per month and welfare payments received.

Which of the following statements concerning the income distribution in the world is true?

With a proportional tax, the average tax rate and marginal tax rate are equal.

The Gini coefficient is computed by

Of the two classes of participants in a market, buyers and sellers, the one who pays most of an excise tax is the one with the greater elasticity.

Suppose a country is concerned about providing adequate incentives for entrepreneurs. What type of tax system should be implemented, progressive or flat?

Property taxes are the largest sources of revenue for local governments.

Exhibit 14-1 -Refer to Exhibit 14-1. If an individual's taxable income is $75,000, how much income tax will that individual have to pay?

A program designed to help people who are out of work is

Under what circumstance would an increase in the payroll tax paid by employers cause the wage to fall by the same percentage as the tax increase, regardless of the labor supply curve's elasticity?

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Reading, Understanding, and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Filters