Question 1

State governments' main source of revenue is

Accepted Answer

A) property taxes. 
B) income taxes. 
C) excise taxes. 
D) sales taxes. 
A) property taxes. 
B) income taxes. 
C) excise taxes. 
D) sales taxes.

Question 2

The share of GDP taken by taxes is considerably higher in the United States than in other countries.

Accepted Answer

A) True 
 B)False

Question 3

A regressive tax is one in which the average tax rate falls as income rises.

Accepted Answer

A) True 
 B)False

Question 4

"Those most able should pay the highest taxes" reflects the

Accepted Answer

A) ability-to-pay principle. 
B) concept of horizontal equity. 
C) idea of fiscal federalism. 
D) benefits principle. 
A) ability-to-pay principle. 
B) concept of horizontal equity. 
C) idea of fiscal federalism. 
D) benefits principle.

Question 5

Payroll taxes are used to collect revenue for the Social Security program.

Accepted Answer

A) True 
 B)False

Question 6

Examples of indirect taxes are

Accepted Answer

A) income taxes levied by some states. 
B) sales taxes and property taxes. 
C) poll taxes. 
D) corporate profits taxes. 
A) income taxes levied by some states. 
B) sales taxes and property taxes. 
C) poll taxes. 
D) corporate profits taxes.

Question 7

The payroll tax represents

Accepted Answer

A) the largest source of revenue in the federal budget. 
B) the second largest source of revenue in the federal budget. 
C) the third largest source of revenue in the federal budget. 
D) the largest source of revenue in state government budgets. 
A) the largest source of revenue in the federal budget. 
B) the second largest source of revenue in the federal budget. 
C) the third largest source of revenue in the federal budget. 
D) the largest source of revenue in state government budgets.

Question 8

The burden of the payroll tax falls entirely on the employee regardless of how it is formally divided between employer and employee if the

Accepted Answer

A) demand for labor is inelastic. 
B) supply of labor curve is horizontal. 
C) supply of labor curve is virtually vertical. 
D) demand for labor curve is elastic. 
A) demand for labor is inelastic. 
B) supply of labor curve is horizontal. 
C) supply of labor curve is virtually vertical. 
D) demand for labor curve is elastic.

Question 9

If a tax is regressive, 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 as income falls. 
A) remains the same as income rises. 
B) rises as income rises. 
C) falls as income rises. 
D) falls as income falls.

Question 10

Which of the following is an example of an indirect tax?

Accepted Answer

A) value-added tax 
B) income tax 
C) inheritance tax 
D) head tax 
A) value-added tax 
B) income tax 
C) inheritance tax 
D) head tax

Question 11

Explain the excess burden of a tax on luxury yachts.

Accepted Answer

A tax on luxury yachts, say of $1,000, w

Question 12

Horizontal equity means that equally situated individuals should be taxed equally.

Accepted Answer

A) True 
 B)False

Question 13

The idea of horizontal equity in taxation implies that

Accepted Answer

A) equally situated individuals should be taxed equally. 
B) unequally situated individuals should be taxed unequally. 
C) benefits should be given first to those individuals who need them most. 
D) the greatest tax burden should be borne by the wealthiest individuals. 
A) equally situated individuals should be taxed equally. 
B) unequally situated individuals should be taxed unequally. 
C) benefits should be given first to those individuals who need them most. 
D) the greatest tax burden should be borne by the wealthiest individuals.

Question 14

The payroll tax is a

Accepted Answer

A) progressive tax. 
B) neutral tax. 
C) regressive tax. 
D) proportional tax. 
A) progressive tax. 
B) neutral tax. 
C) regressive tax. 
D) proportional tax.

Question 15

Compared to other countries, the U.S.federal government relies

Accepted Answer

A) more heavily on direct taxes than do governments of other countries. 
B) less heavily on direct taxes than do governments of other countries. 
C) more heavily on indirect taxes than do governments of other countries. 
D) on direct taxes about as heavily as do governments of other countries. 
A) more heavily on direct taxes than do governments of other countries. 
B) less heavily on direct taxes than do governments of other countries. 
C) more heavily on indirect taxes than do governments of other countries. 
D) on direct taxes about as heavily as do governments of other countries.

Question 16

How is state and local government funded and how does such funding differ from federal government funding?

Accepted Answer

State and local governments rely heavily

Question 17

One major tax loophole intended to help state & local governments raise funds is:

Accepted Answer

A) fiscal federalism 
B) tax exempt municipal bond interest 
C) tax deductible mortgage interest 
D) tax credits for solar panels 
A) fiscal federalism 
B) tax exempt municipal bond interest 
C) tax deductible mortgage interest 
D) tax credits for solar panels

Question 18

Define the following terms and explain their importance to the study of economics:
a.regressive tax
b.proportional tax
c.progressive tax
d.direct tax
e.indirect tax

Accepted Answer

The answer of Define the following terms and explain their...

Question 19

Americans generally pay

Accepted Answer

A) a lower percentage of their incomes in taxes than citizens of other industrialized countries. 
B) a lower percentage of their incomes in taxes than citizens of other industrialized countries, with the exceptions of Sweden and the Netherlands. 
C) about the same percentage of their incomes in taxes as citizens of other industrialized countries. 
D) a higher percentage of their incomes in taxes than citizens of other industrialized countries. 
A) a lower percentage of their incomes in taxes than citizens of other industrialized countries. 
B) a lower percentage of their incomes in taxes than citizens of other industrialized countries, with the exceptions of Sweden and the Netherlands. 
C) about the same percentage of their incomes in taxes as citizens of other industrialized countries. 
D) a higher percentage of their incomes in taxes than citizens of other industrialized countries.

Question 20

The shares of GDP taken in taxes by federal, state & local governments

Accepted Answer

A) have risen steadily in the past 40 years to about 22 percent. 
B) have dropped steadily in the past 40 years to about 6 or 7 percent. 
C) grew substantially until the early 1970s and have leveled off at about 10 to 11 percent. 
D) fell steadily until the early 1970s and has risen steadily since then. 
A) have risen steadily in the past 40 years to about 22 percent. 
B) have dropped steadily in the past 40 years to about 6 or 7 percent. 
C) grew substantially until the early 1970s and have leveled off at about 10 to 11 percent. 
D) fell steadily until the early 1970s and has risen steadily since then.

Exam 17: Taxation and Resource Allocation

State governments' main source of revenue is

The share of GDP taken by taxes is considerably higher in the United States than in other countries.

A regressive tax is one in which the average tax rate falls as income rises.

"Those most able should pay the highest taxes" reflects the

Payroll taxes are used to collect revenue for the Social Security program.

Examples of indirect taxes are

The payroll tax represents

The burden of the payroll tax falls entirely on the employee regardless of how it is formally divided between employer and employee if the

If a tax is regressive, the average tax rate

Which of the following is an example of an indirect tax?

Explain the excess burden of a tax on luxury yachts.

Horizontal equity means that equally situated individuals should be taxed equally.

The idea of horizontal equity in taxation implies that

The payroll tax is a

Compared to other countries, the U.S.federal government relies

How is state and local government funded and how does such funding differ from federal government funding?

One major tax loophole intended to help state & local governments raise funds is:

Define the following terms and explain their importance to the study of economics: a.regressive tax b.proportional tax c.progressive tax d.direct tax e.indirect tax

Americans generally pay

The shares of GDP taken in taxes by federal, state & local governments

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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