Question 1

Are property taxes progressive or regressive?

Accepted Answer

The nature of property taxes is controve

Question 2

Above a certain income the marginal social security tax drops to zero.

Accepted Answer

A) True 
 B)False

Question 3

Pay as you go financing for the Social Security System was abandoned in 1983.

Accepted Answer

A) True 
 B)False

Question 4

The incidence of a payroll tax

Accepted Answer

A) depends upon whether it is levied on the employer or employee. 
B) is the same whether it is levied on the employer or the employee. 
C) is more heavily on the employee as demand for labor becomes more elastic. 
D) is more heavily on the employer as demand for labor becomes less elastic. 
A) depends upon whether it is levied on the employer or employee. 
B) is the same whether it is levied on the employer or the employee. 
C) is more heavily on the employee as demand for labor becomes more elastic. 
D) is more heavily on the employer as demand for labor becomes less elastic.

Question 5

Which is the correct order of importance in terms of revenue collected among the following federal taxes?

Accepted Answer

A) (1) corporate income taxes (2) value-added taxes (3) excise taxes 
B) (1) personal income taxes (2) corporate income taxes (3) sales taxes 
C) (1) payroll taxes (2) personal income taxes (3) federal excise taxes 
D) (1) personal income taxes (2) payroll taxes (3) corporate income taxes 
A) (1) corporate income taxes (2) value-added taxes (3) excise taxes 
B) (1) personal income taxes (2) corporate income taxes (3) sales taxes 
C) (1) payroll taxes (2) personal income taxes (3) federal excise taxes 
D) (1) personal income taxes (2) payroll taxes (3) corporate income taxes

Question 6

The sales tax is generally considered to be a regressive tax.

Accepted Answer

A) True 
 B)False

Question 7

Taxation can promote good social policy while minimizing economic inefficiency.

Accepted Answer

A) True 
 B)False

Question 8

Sales taxes, property taxes, and value-added taxes are examples of indirect taxes.

Accepted Answer

A) True 
 B)False

Question 9

Michigan recently did away with property taxes.Alternative funding for schools could come from

Accepted Answer

A) a lottery system. 
B) an increase in sales tax and income tax. 
C) an increase in corporate taxes. 
D) All of the above are correct. 
A) a lottery system. 
B) an increase in sales tax and income tax. 
C) an increase in corporate taxes. 
D) All of the above are correct.

Question 10

Figure 18-1  
-The economic burden of an excise tax

Accepted Answer

A) can usually be partially shifted from buyers onto sellers. 
B) equals the revenue from the tax. 
C) is less than the burden of an income tax that would raise the same revenue. 
D) is shared equally by buyers and sellers. 
A) can usually be partially shifted from buyers onto sellers. 
B) equals the revenue from the tax. 
C) is less than the burden of an income tax that would raise the same revenue. 
D) is shared equally by buyers and sellers.

Question 11

When taxes alter individual behavior as people attempt to avoid the tax, efficiency

Accepted Answer

A) losses are probable. 
B) gains are possible. 
C) gains are impossible. 
D) losses are impossible. 
A) losses are probable. 
B) gains are possible. 
C) gains are impossible. 
D) losses are impossible.

Question 12

The concept that describes the situation where the economy has used every available opportunity to make someone better off without making someone else worse off is

Accepted Answer

A) economic efficiency. 
B) the benefits principle. 
C) horizontal equity. 
D) vertical equity. 
A) economic efficiency. 
B) the benefits principle. 
C) horizontal equity. 
D) vertical equity.

Question 13

When demand for a product is very inelastic, the burden of a tax falls mainly on

Accepted Answer

A) producers. 
B) consumers. 
C) tax collectors. 
D) people who drop out of the market. 
A) producers. 
B) consumers. 
C) tax collectors. 
D) people who drop out of the market.

Question 14

Vertical equity refers to the notion that individuals at all levels should be taxed equally.

Accepted Answer

A) True 
 B)False

Question 15

Many Americans believe that taxes have been gobbling up an ever-increasing share of the U.S.economy.Is this observation correct? Explain.

Accepted Answer

Available data suggests that the share o

Question 16

From the passage of the 16th amendment to the U.S.Constitution, income taxes became the primary source of income for the U.S.

Accepted Answer

A) True 
 B)False

Question 17

The payroll tax receipts

Accepted Answer

A) are used to reduce the national debt. 
B) are invested in private business for future payments. 
C) pay off current recipients of Social Security payments. 
D) go directly into a trust fund for investment in private businesses. 
A) are used to reduce the national debt. 
B) are invested in private business for future payments. 
C) pay off current recipients of Social Security payments. 
D) go directly into a trust fund for investment in private businesses.

Question 18

Which of the following situations is a clear application of the benefits principle of taxation?

Accepted Answer

A) wealthier people are taxed more heavily 
B) heavier vehicles are charged higher tolls on turnpikes 
C) state government providing a free education to any child in the state 
D) sales of measles vaccine exempt from sales tax 
A) wealthier people are taxed more heavily 
B) heavier vehicles are charged higher tolls on turnpikes 
C) state government providing a free education to any child in the state 
D) sales of measles vaccine exempt from sales tax

Question 19

The most important indirect taxes in the United States are

Accepted Answer

A) federal and state income taxes. 
B) inheritance taxes. 
C) corporate profits taxes. 
D) sales and property taxes. 
A) federal and state income taxes. 
B) inheritance taxes. 
C) corporate profits taxes. 
D) sales and property taxes.

Question 20

Why do many economists rate the income tax high in efficiency and equity terms?

Accepted Answer

The income tax could potentially reduce

Exam 17: Taxation and Resource Allocation

Are property taxes progressive or regressive?

Above a certain income the marginal social security tax drops to zero.

Pay as you go financing for the Social Security System was abandoned in 1983.

The incidence of a payroll tax

Which is the correct order of importance in terms of revenue collected among the following federal taxes?

The sales tax is generally considered to be a regressive tax.

Taxation can promote good social policy while minimizing economic inefficiency.

Sales taxes, property taxes, and value-added taxes are examples of indirect taxes.

Michigan recently did away with property taxes.Alternative funding for schools could come from

Figure 18-1 -The economic burden of an excise tax

When taxes alter individual behavior as people attempt to avoid the tax, efficiency

The concept that describes the situation where the economy has used every available opportunity to make someone better off without making someone else worse off is

When demand for a product is very inelastic, the burden of a tax falls mainly on

Vertical equity refers to the notion that individuals at all levels should be taxed equally.

Many Americans believe that taxes have been gobbling up an ever-increasing share of the U.S.economy.Is this observation correct? Explain.

From the passage of the 16th amendment to the U.S.Constitution, income taxes became the primary source of income for the U.S.

The payroll tax receipts

Which of the following situations is a clear application of the benefits principle of taxation?

The most important indirect taxes in the United States are

Why do many economists rate the income tax high in efficiency and equity terms?

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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