Question 1

The results of majority voting sometimes, but not always, agree with the results of benefit-cost analysis.

Accepted Answer

A) True 
 B)False

Question 2

The federal income tax is progressive because poor people pay little or no taxes.

Accepted Answer

A) True 
 B)False

Question 3

Generally, most economists feel that a sales tax is:

Accepted Answer

A) regressive. 
B) proportional. 
C) progressive. 
D) fair. 
A) regressive. 
B) proportional. 
C) progressive. 
D) fair.

Question 4

Which of the following statements is true ?

Accepted Answer

A) The most important source of revenue to the federal government is personal income taxes. 
B) The most important source of revenue to state governments are sales and property taxes. 
C) The most important source of revenue to local governments are local property taxes. 
D) The taxation burden, measured by taxes as a percentage of GDP, is lighter in the United States than in most other advanced industrial countries. 
E) All of these. 
A) The most important source of revenue to the federal government is personal income taxes. 
B) The most important source of revenue to state governments are sales and property taxes. 
C) The most important source of revenue to local governments are local property taxes. 
D) The taxation burden, measured by taxes as a percentage of GDP, is lighter in the United States than in most other advanced industrial countries. 
E) All of these.

Question 5

A person who is in the 15 percent marginal tax bracket and has a total taxable income of $100,000 will owe $15,000 in taxes.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following can be classified as a regressive tax?

Accepted Answer

A) Excise tax. 
B) Sales tax. 
C) Gasoline tax. 
D) All of these. 
A) Excise tax. 
B) Sales tax. 
C) Gasoline tax. 
D) All of these.

Question 7

Sharon pays a tax of $4,000 on her income of $40,000, while Brad pays a tax of $1,000 on his income of $20,000. This tax is:

Accepted Answer

A) regressive. 
B) progressive. 
C) proportional. 
D) a flat tax. 
A) regressive. 
B) progressive. 
C) proportional. 
D) a flat tax.

Question 8

If a person is taxed $100 on an income of $1,000, taxed $200 on an income of $2,000, and taxed $300 on an income of $3,000, this person is paying a(n):

Accepted Answer

A) progressive tax. 
B) poll tax. 
C) regressive tax. 
D) excise tax. 
E) proportional tax. 
A) progressive tax. 
B) poll tax. 
C) regressive tax. 
D) excise tax. 
E) proportional tax.

Question 9

Exhibit 12-3 Income for two persons   In Exhibit 12-3, if the income tax system is currently proportional, we know that:

Accepted Answer

A) Meredith would probably prefer a progressive income tax system while Hillary would probably prefer a regressive income tax system. 
B) Meredith and Hillary would both probably prefer a regressive income tax system. 
C) Meredith and Hillary would both probably prefer a progressive income tax system. 
D) Meredith would probably prefer a regressive income tax system while Hillary would probably prefer a progressive income tax system. 
E) Meredith would probably prefer a progressive income tax system while Hillary would probably prefer a head tax. 
A) Meredith would probably prefer a progressive income tax system while Hillary would probably prefer a regressive income tax system. 
B) Meredith and Hillary would both probably prefer a regressive income tax system. 
C) Meredith and Hillary would both probably prefer a progressive income tax system. 
D) Meredith would probably prefer a regressive income tax system while Hillary would probably prefer a progressive income tax system. 
E) Meredith would probably prefer a progressive income tax system while Hillary would probably prefer a head tax.

Question 10

A tax is regressive if it collects a:

Accepted Answer

A) larger amount as income rises. 
B) constant amount as income rises. 
C) smaller fraction of income as income falls. 
D) smaller fraction of income as income rises. 
A) larger amount as income rises. 
B) constant amount as income rises. 
C) smaller fraction of income as income falls. 
D) smaller fraction of income as income rises.

Question 11

Many public choice economists believe that elected political officials would make better choices if they had to vote for higher taxes in order to adopt new spending programs.

Accepted Answer

A) True 
 B)False

Question 12

Rational ignorance might explain low voter turnout because people apply marginal analysis to voting.

Accepted Answer

A) True 
 B)False

Question 13

Some cities finance their airports with a departure tax: every person leaving the city by plane is charged a small fixed dollar amount that is used to help pay for building and running the airport. The departure tax follows the:

Accepted Answer

A) benefits-received principle. 
B) ability-to-pay principle. 
C) flat-rate taxation principle. 
D) public-choice principle. 
A) benefits-received principle. 
B) ability-to-pay principle. 
C) flat-rate taxation principle. 
D) public-choice principle.

Question 14

Exhibit 12-1 Income for two persons   In Exhibit 12-1, if the income tax system is proportional, then:

Accepted Answer

A) Elaine and Daniel will face the same tax rate and will have tax bills the same size. 
B) Elaine and Daniel will face the same tax rate but Elaine's tax bill will be larger. 
C) Elaine will face a higher tax rate and will have a larger tax bill than Daniel. 
D) Elaine will face a lower tax rate and will have a smaller tax bill than Daniel. 
E) Elaine will face a lower tax rate but will have a larger tax bill than Daniel. 
A) Elaine and Daniel will face the same tax rate and will have tax bills the same size. 
B) Elaine and Daniel will face the same tax rate but Elaine's tax bill will be larger. 
C) Elaine will face a higher tax rate and will have a larger tax bill than Daniel. 
D) Elaine will face a lower tax rate and will have a smaller tax bill than Daniel. 
E) Elaine will face a lower tax rate but will have a larger tax bill than Daniel.

Question 15

When the government levies a tax where everyone is taxed the same fixed percentage of their incomes, this tax is known as a(n):

Accepted Answer

A) regressive tax. 
B) progressive tax. 
C) proportional tax. 
D) excise tax. 
E) luxury tax. 
A) regressive tax. 
B) progressive tax. 
C) proportional tax. 
D) excise tax. 
E) luxury tax.

Question 16

Which of the following is a regressive tax?

Accepted Answer

A) A state tax of 5 percent of income. 
B) A local sales tax of 5 percent. 
C) The federal individual income tax. 
D) A federal flat tax of 30 percent. 
A) A state tax of 5 percent of income. 
B) A local sales tax of 5 percent. 
C) The federal individual income tax. 
D) A federal flat tax of 30 percent.

Question 17

Cost-benefit analysis can be applied to individual decision-making and public choice theory.

Accepted Answer

A) True 
 B)False

Question 18

Voters may choose to remain uninformed about an issue because of:

Accepted Answer

A) the special-interest effect. 
B) rational ignorance. 
C) bureaucratic inefficiency. 
D) the shortsightedness effect. 
A) the special-interest effect. 
B) rational ignorance. 
C) bureaucratic inefficiency. 
D) the shortsightedness effect.

Question 19

Exhibit 12-3 Income for two persons   In Exhibit 12-3, if the income tax system is currently progressive, we know that:

Accepted Answer

A) Meredith has a larger tax bill than Hillary, although they pay the same tax rate. 
B) Hillary has a larger tax bill than Meredith, although they pay the same tax rate. 
C) Meredith has a larger tax bill than Hillary and pays a higher tax rate. 
D) Hillary has a larger tax bill than Meredith and pays a higher tax rate. 
E) Meredith's and Hillary's tax bills are equal. 
A) Meredith has a larger tax bill than Hillary, although they pay the same tax rate. 
B) Hillary has a larger tax bill than Meredith, although they pay the same tax rate. 
C) Meredith has a larger tax bill than Hillary and pays a higher tax rate. 
D) Hillary has a larger tax bill than Meredith and pays a higher tax rate. 
E) Meredith's and Hillary's tax bills are equal.

Question 20

Exhibit 12-4 Marginal tax rate lines   In Exhibit 12-4, line B represents a:

Accepted Answer

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

Exam 12: The Public Sector

The results of majority voting sometimes, but not always, agree with the results of benefit-cost analysis.

The federal income tax is progressive because poor people pay little or no taxes.

Generally, most economists feel that a sales tax is:

Which of the following statements is true ?

A person who is in the 15 percent marginal tax bracket and has a total taxable income of $100,000 will owe $15,000 in taxes.

Which of the following can be classified as a regressive tax?

Sharon pays a tax of $4,000 on her income of $40,000, while Brad pays a tax of $1,000 on his income of $20,000. This tax is:

If a person is taxed $100 on an income of $1,000, taxed $200 on an income of $2,000, and taxed $300 on an income of $3,000, this person is paying a(n):

Exhibit 12-3 Income for two persons In Exhibit 12-3, if the income tax system is currently proportional, we know that:

A tax is regressive if it collects a:

Many public choice economists believe that elected political officials would make better choices if they had to vote for higher taxes in order to adopt new spending programs.

Rational ignorance might explain low voter turnout because people apply marginal analysis to voting.

Some cities finance their airports with a departure tax: every person leaving the city by plane is charged a small fixed dollar amount that is used to help pay for building and running the airport. The departure tax follows the:

Exhibit 12-1 Income for two persons In Exhibit 12-1, if the income tax system is proportional, then:

When the government levies a tax where everyone is taxed the same fixed percentage of their incomes, this tax is known as a(n):

Which of the following is a regressive tax?

Cost-benefit analysis can be applied to individual decision-making and public choice theory.

Voters may choose to remain uninformed about an issue because of:

Exhibit 12-3 Income for two persons In Exhibit 12-3, if the income tax system is currently progressive, we know that:

Exhibit 12-4 Marginal tax rate lines In Exhibit 12-4, line B represents a:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Applying Graphs to Economics

Consumer Surplus, Producer Surplus, and Market Efficiency

the Self-Correcting Aggregate Demand and Supply Model

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

Filters