Question 1

The more inelastic the demand for a product, the larger the share of the tax that will be paid by consumers.

Accepted Answer

A) True 
 B)False

Question 2

Are property taxes progressive or regressive?

Accepted Answer

The nature of property taxes is controve

Question 3

Corporate taxes are a direct tax.

Accepted Answer

A) True 
 B)False

Question 4

What are the arguments for and against federal government grants to states?

Accepted Answer

Supporters of large grants see state gov

Question 5

The money for Social Security payments to current retirees comes from

Accepted Answer

A) payroll taxes collected from those retirees when they were working. 
B) income taxes collected from the current working population. 
C) payroll taxes collected from the current working population. 
D) only the interest earned now by the government on the invested Social Security trust fund. 
A) payroll taxes collected from those retirees when they were working. 
B) income taxes collected from the current working population. 
C) payroll taxes collected from the current working population. 
D) only the interest earned now by the government on the invested Social Security trust fund.

Question 6

The benefits principle states that those who

Accepted Answer

A) pay the taxes should reap the benefits. 
B) reap the benefits from government should pay the taxes. 
C) are best able to pay should pay for what they receive. 
D) pay taxes get the benefits they deserve. 
A) pay the taxes should reap the benefits. 
B) reap the benefits from government should pay the taxes. 
C) are best able to pay should pay for what they receive. 
D) pay taxes get the benefits they deserve.

Question 7

The United States Social Security system

Accepted Answer

A) pays benefits in direct accordance to what each individual has paid into the system. 
B) has paid the current generation of recipients less in benefits than it paid in payroll taxes. 
C) has paid the current generation of recipients more than it paid in payroll taxes. 
D) paid the earlier generations more and the current generation less than each paid in payroll taxes. 
A) pays benefits in direct accordance to what each individual has paid into the system. 
B) has paid the current generation of recipients less in benefits than it paid in payroll taxes. 
C) has paid the current generation of recipients more than it paid in payroll taxes. 
D) paid the earlier generations more and the current generation less than each paid in payroll taxes.

Question 8

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 9

Which of the following is most consistent with the benefits principle?

Accepted Answer

A) Charging taxes to the people who use the funded services 
B) Taxes that account for a person's ability to pay 
C) Excise taxes on imported aluminum 
D) Sales taxes on cigarettes 
A) Charging taxes to the people who use the funded services 
B) Taxes that account for a person's ability to pay 
C) Excise taxes on imported aluminum 
D) Sales taxes on cigarettes

Question 10

The share of GDP going to federal taxes

Accepted Answer

A) has been about 16 to 20 percent for the past 40 years. 
B) has been about 35 percent for the past 40 years. 
C) was about 40 percent until the early 1980s and has dropped greatly since then. 
D) has risen steadily in the past 40 years to about 35 percent. 
A) has been about 16 to 20 percent for the past 40 years. 
B) has been about 35 percent for the past 40 years. 
C) was about 40 percent until the early 1980s and has dropped greatly since then. 
D) has risen steadily in the past 40 years to about 35 percent.

Question 11

State and local governments typically spend most of their budgets on providing

Accepted Answer

A) education. 
B) public goods. 
C) public welfare programs. 
D) police protection and administrative services. 
A) education. 
B) public goods. 
C) public welfare programs. 
D) police protection and administrative services.

Question 12

A congress member concerned about ensuring vertical equity in taxation would be most likely to argue for obtaining government revenue through a

Accepted Answer

A) progressive tax on personal income. 
B) regressive tax on corporate income. 
C) sales tax. 
D) head tax. 
A) progressive tax on personal income. 
B) regressive tax on corporate income. 
C) sales tax. 
D) head tax.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Which of the following government entities relies most heavily on sales taxes?

Accepted Answer

A) Local government 
B) State government 
C) Federal government 
D) The Social Security Administration 
A) Local government 
B) State government 
C) Federal government 
D) The Social Security Administration

Question 15

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 16

The marginal tax rate is the change in the average tax rate as income increases.

Accepted Answer

A) True 
 B)False

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

Cities and towns mainly rely for revenue on

Accepted Answer

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

Question 19

Which of the following is not true for the U.S.payroll tax?

Accepted Answer

A) The incidence falls mainly on employees. 
B) It is levied on employers. 
C) It is levied on employees. 
D) The incidence falls mainly on employers. 
A) The incidence falls mainly on employees. 
B) It is levied on employers. 
C) It is levied on employees. 
D) The incidence falls mainly on employers.

Question 20

A tax loophole is

Accepted Answer

A) an illegal method by which individuals or corporations avoid paying the taxes they legally owe. 
B) a provision in the tax code that allows individuals or corporations to reduce their tax burdens legally by meeting certain conditions. 
C) a tax surcharge on incomes within certain ranges. 
D) a provision in the tax code that allows individuals or corporations to shift the economic incidence of a particular tax on to someone else. 
A) an illegal method by which individuals or corporations avoid paying the taxes they legally owe. 
B) a provision in the tax code that allows individuals or corporations to reduce their tax burdens legally by meeting certain conditions. 
C) a tax surcharge on incomes within certain ranges. 
D) a provision in the tax code that allows individuals or corporations to shift the economic incidence of a particular tax on to someone else.

Exam 17: Taxation and Resource Allocation

The more inelastic the demand for a product, the larger the share of the tax that will be paid by consumers.

Are property taxes progressive or regressive?

Corporate taxes are a direct tax.

What are the arguments for and against federal government grants to states?

The money for Social Security payments to current retirees comes from

The benefits principle states that those who

The United States Social Security system

The most important indirect taxes in the United States are

Which of the following is most consistent with the benefits principle?

The share of GDP going to federal taxes

State and local governments typically spend most of their budgets on providing

A congress member concerned about ensuring vertical equity in taxation would be most likely to argue for obtaining government revenue through a

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

Which of the following government entities relies most heavily on sales taxes?

Americans generally pay

The marginal tax rate is the change in the average tax rate as income increases.

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

Cities and towns mainly rely for revenue on

Which of the following is not true for the U.S.payroll tax?

A tax loophole is

What Is Economics

The Economony: 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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of the Environment, and Natural Resources

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Useconomy

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