Question 1

Regarding taxation and efficiency, which of the following statements is not true?

Accepted Answer

A) ​Many inefficiencies arise from taxation. 
B) ​Many burdens arise from taxation. 
C) ​Some taxes lead to greater efficiency. 
D) ​All of the above statements are true. 
A) ​Many inefficiencies arise from taxation. 
B) ​Many burdens arise from taxation. 
C) ​Some taxes lead to greater efficiency. 
D) ​All of the above statements are true.

Question 2

Social Security payroll taxes are examples of

Accepted Answer

A) progressive taxation. 
B) regressive taxation. 
C) proportional taxation. 
D) marginal taxes. 
A) progressive taxation. 
B) regressive taxation. 
C) proportional taxation. 
D) marginal taxes.

Question 3

If a tax is progressive, the average tax rate

Accepted Answer

A) remains the same as income rises. 
B) rises as income rises. 
C) falls as income rises. 
D) falls with passage of time. 
A) remains the same as income rises. 
B) rises as income rises. 
C) falls as income rises. 
D) falls with passage of time.

Question 4

Suppose that the government imposes an excise tax on widgets.The portion of the tax borne by the buyer of widgets depends upon

Accepted Answer

A) elasticity of demand. 
B) income of buyers. 
C) size of the tax that is imposed. 
D) cross elasticity of demand between widgets and floogles. 
A) elasticity of demand. 
B) income of buyers. 
C) size of the tax that is imposed. 
D) cross elasticity of demand between widgets and floogles.

Question 5

Taxes on sales of liquor, tobacco, and tires are examples of

Accepted Answer

A) direct taxes. 
B) excise taxes. 
C) progressive taxation. 
D) loopholes. 
A) direct taxes. 
B) excise taxes. 
C) progressive taxation. 
D) loopholes.

Question 6

The Social Security system works exactly like any private retirement trust system.

Accepted Answer

A) True 
 B)False

Question 7

When we say most Americans are in the 15-percent tax bracket, we mean federal taxes are about 15 percent of the income of most Americans.

Accepted Answer

A) True 
 B)False

Question 8

No tax can lead the economy to higher levels of efficiency.

Accepted Answer

A) True 
 B)False

Question 9

Direct taxes are levied directly on people or corporations.

Accepted Answer

A) True 
 B)False

Question 10

Explain the purpose of payroll taxes.Is it a proportional form of tax?

Accepted Answer

The payroll tax is a tax levied on the e

Question 11

Taxes are either

Accepted Answer

A) regressive, proportional, or degressive. 
B) regressive, proportional, or progressive. 
C) degressive, proportional, or progressive. 
D) regressive, progressive, or degressive. 
A) regressive, proportional, or degressive. 
B) regressive, proportional, or progressive. 
C) degressive, proportional, or progressive. 
D) regressive, progressive, or degressive.

Question 12

A tax that creates an excess burden may nevertheless improve efficiency if

Accepted Answer

A) consumption of the good has been generating beneficial externalities. 
B) consumption of the good has been generating no externalities. 
C) consumption of the good has been generating detrimental externalities. 
D) the good has been supplied by a monopolist. 
A) consumption of the good has been generating beneficial externalities. 
B) consumption of the good has been generating no externalities. 
C) consumption of the good has been generating detrimental externalities. 
D) the good has been supplied by a monopolist.

Question 13

State and local governments receive money from sales taxes, property taxes, and the federal government.

Accepted Answer

A) True 
 B)False

Question 14

The burden of a tax is

Accepted Answer

A) the amount of revenue that the government raises from the tax. 
B) what it would cost in alternative tax revenue to provide the same level of service. 
C) greater as the total revenue from the tax decreases. 
D) the amount the taxpayer would have to be given to be just as well off in the presence of the tax as in its absence. 
A) the amount of revenue that the government raises from the tax. 
B) what it would cost in alternative tax revenue to provide the same level of service. 
C) greater as the total revenue from the tax decreases. 
D) the amount the taxpayer would have to be given to be just as well off in the presence of the tax as in its absence.

Question 15

The payroll tax appears to be a proportional tax.In reality it is

Accepted Answer

A) highly progressive. 
B) actually proportional. 
C) highly regressive. 
D) regressive on low-income persons and progressive on high-income persons. 
A) highly progressive. 
B) actually proportional. 
C) highly regressive. 
D) regressive on low-income persons and progressive on high-income persons.

Question 16

Briefly and concisely define the following terms:
a.fiscal federalism
b.horizontal equity
c.vertical equity
d.benefits principle of taxation

Accepted Answer

a.Fiscal federalism is a system of inter

Question 17

Vertical equity in income taxation refers to the notion that persons with different levels of income should be taxed differently.

Accepted Answer

A) True 
 B)False

Question 18

The ____ is the fraction of each additional dollar of income that is paid in taxes.

Accepted Answer

A) deferred tax rate 
B) cumulative tax rate 
C) average tax rate 
D) marginal tax rate 
A) deferred tax rate 
B) cumulative tax rate 
C) average tax rate 
D) marginal tax rate

Question 19

Since World War II, the share of corporate income tax collections in total federal revenue has been:

Accepted Answer

A) increasing rapidly. 
B) declining rapidly. 
C) increasing slowly. 
D) declining generally. 
A) increasing rapidly. 
B) declining rapidly. 
C) increasing slowly. 
D) declining generally.

Question 20

A progressive tax is one in which the fraction of income paid in taxes rises as a person's income increases.

Accepted Answer

A) True 
 B)False

Exam 17: Taxation and Resource Allocation

Regarding taxation and efficiency, which of the following statements is not true?

Social Security payroll taxes are examples of

If a tax is progressive, the average tax rate

Suppose that the government imposes an excise tax on widgets.The portion of the tax borne by the buyer of widgets depends upon

Taxes on sales of liquor, tobacco, and tires are examples of

The Social Security system works exactly like any private retirement trust system.

When we say most Americans are in the 15-percent tax bracket, we mean federal taxes are about 15 percent of the income of most Americans.

No tax can lead the economy to higher levels of efficiency.

Direct taxes are levied directly on people or corporations.

Explain the purpose of payroll taxes.Is it a proportional form of tax?

Taxes are either

A tax that creates an excess burden may nevertheless improve efficiency if

State and local governments receive money from sales taxes, property taxes, and the federal government.

The burden of a tax is

The payroll tax appears to be a proportional tax.In reality it is

Briefly and concisely define the following terms: a.fiscal federalism b.horizontal equity c.vertical equity d.benefits principle of taxation

Vertical equity in income taxation refers to the notion that persons with different levels of income should be taxed differently.

The ____ is the fraction of each additional dollar of income that is paid in taxes.

Since World War II, the share of corporate income tax collections in total federal revenue has been:

A progressive tax is one in which the fraction of income paid in taxes rises as a person's income increases.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand an Initial Look

Consumer Choice Individual and Market Demand

Demand and Elasticity

Production Inputs and Cost Building Blocks for Supply Analysis

Output Price and Profit the Importance of Marginal Analysis

Securities Business Finance and the Economy the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power Regulation and Antitrust

The Case for Free Markets the Price System

The Shortcomings of Free Markets

Externalities the Environment and Natural Resources

Pricing the Factors of Production

Labor and Entrepreneurship the Human Inputs

Poverty Inequality and Discrimination

Is Us Economic Leadership Threatened

International Trade and Comparative Advantage

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