Question 1

Which of the following statements is true ?

Accepted Answer

A)  Sales, excise, and flat-rate taxes violate the ability-to-pay principle of taxation fairness because each results in a greater burden on the poor than the rich. 
B)  Government failure may occur if voters are rationally ignorant. 
C)  Government failure may occur because of special-interest group political pressure. 
D)  All of the above. 
A)  Sales, excise, and flat-rate taxes violate the ability-to-pay principle of taxation fairness because each results in a greater burden on the poor than the rich. 
B)  Government failure may occur if voters are rationally ignorant. 
C)  Government failure may occur because of special-interest group political pressure. 
D)  All of the above.

Question 2

State and local property taxes are regressive.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is false ?

Accepted Answer

A)  The largest source of state and local governments tax revenue is sales and excise taxes. 
B)  The largest source of federal government tax revenue is individual income taxes. 
C)  A sales tax on food is a regressive tax. 
D)  A proportional tax is equal to a fixed dollar amount. 
A)  The largest source of state and local governments tax revenue is sales and excise taxes. 
B)  The largest source of federal government tax revenue is individual income taxes. 
C)  A sales tax on food is a regressive tax. 
D)  A proportional tax is equal to a fixed dollar amount.

Question 4

Currently, total private sector expenditures in the United States:

Accepted Answer

A)  remained close to one third of GDP. 
B)  fell by half to 50 percent of GDP. 
C)  fell by half to about 65 percent of GDP. 
D)  remained close to 70 percent of GDP. 
A)  remained close to one third of GDP. 
B)  fell by half to 50 percent of GDP. 
C)  fell by half to about 65 percent of GDP. 
D)  remained close to 70 percent of GDP.

Question 5

What are the public choice theory arguments against government involvement in the economy?

Accepted Answer

Public choice theory emphasizes the poss

Question 6

A tax whose impact varies inversely with the income of the person taxed, and poor people have a higher percentage of their income taxed than rich people, is known as a:

Accepted Answer

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

Question 7

Which of the following countries had the lowest level of government expenditures as a share of GDP?

Accepted Answer

A)  Sweden. 
B)  Japan. 
C)  United States. 
D)  Italy. 
A)  Sweden. 
B)  Japan. 
C)  United States. 
D)  Italy.

Question 8

The Social Security payroll tax tends to be regressive.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 16-4  Marginal tax rate lines   In Exhibit 16-4, line C represents a:

Accepted Answer

A)  regressive tax. 
B)  progressive tax. 
C)  proportional tax. 
D)  ability-to-pay tax. 
A)  regressive tax. 
B)  progressive tax. 
C)  proportional tax. 
D)  ability-to-pay tax.

Question 10

When a tax is regressive, as a person's income rises, the tax rate:

Accepted Answer

A)  stays the same. 
B)  decreases. 
C)  increases. 
D)  increase and then decreases. 
E)  decreases and then increases. 
A)  stays the same. 
B)  decreases. 
C)  increases. 
D)  increase and then decreases. 
E)  decreases and then increases.

Question 11

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 12

The study of the decision-making process of government is the study of:

Accepted Answer

A)  Keynesian economics. 
B)  public choice theory. 
C)  rational expectations theory. 
D)  social economics. 
A)  Keynesian economics. 
B)  public choice theory. 
C)  rational expectations theory. 
D)  social economics.

Question 13

Which of the following is approximately is the current total government expenditures as a percent of GDP in the U.S.?

Accepted Answer

A)  ​15 percent. 
B)  ​ 25 percent. 
C)  ​35 percent. 
D)  ​50 percent. ​ 
A)  ​15 percent. 
B)  ​ 25 percent. 
C)  ​35 percent. 
D)  ​50 percent. ​

Question 14

Exhibit 16-2  Income and taxes for two persons   In Exhibit 16-2, we can tell that the tax shown here is:

Accepted Answer

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

Question 15

Cost-benefit analysis cannot be applied to collective or public choice decision-making.

Accepted Answer

A) True 
 B)False

Question 16

Under a progressive tax system, the tax rate increases as income increases.

Accepted Answer

A) True 
 B)False

Question 17

How does total taxes as a percentage of GDP in the United States compare to those of Western European countries, such as the United Kingdom, Germany, and Sweden?

Accepted Answer

A)  U.S. taxation is smaller. 
B)  U.S. taxation is about the same. 
C)  U.S. taxation is slightly larger. 
D)  U.S. taxation is substantially larger. 
A)  U.S. taxation is smaller. 
B)  U.S. taxation is about the same. 
C)  U.S. taxation is slightly larger. 
D)  U.S. taxation is substantially larger.

Question 18

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 19

If a person is taxed $100 on an income of $1,000, taxed $220 on an income of $2,000, and taxed $390 on an income of $3,000, this person is paying a:

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 20

Who is recognized as the founder of public choice theory?

Accepted Answer

A)  James Buchanan. 
B)  Steve Forbes. 
C)  Joseph Pechman. 
D)  Adam Smith. 
A)  James Buchanan. 
B)  Steve Forbes. 
C)  Joseph Pechman. 
D)  Adam Smith.

Exam 16: The Public Sector

Which of the following statements is true ?

State and local property taxes are regressive.

Which of the following statements is false ?

Currently, total private sector expenditures in the United States:

What are the public choice theory arguments against government involvement in the economy?

A tax whose impact varies inversely with the income of the person taxed, and poor people have a higher percentage of their income taxed than rich people, is known as a:

Which of the following countries had the lowest level of government expenditures as a share of GDP?

The Social Security payroll tax tends to be regressive.

Exhibit 16-4 Marginal tax rate lines In Exhibit 16-4, line C represents a:

When a tax is regressive, as a person's income rises, the tax rate:

A tax is regressive if it collects a:

The study of the decision-making process of government is the study of:

Which of the following is approximately is the current total government expenditures as a percent of GDP in the U.S.?

Exhibit 16-2 Income and taxes for two persons In Exhibit 16-2, we can tell that the tax shown here is:

Cost-benefit analysis cannot be applied to collective or public choice decision-making.

Under a progressive tax system, the tax rate increases as income increases.

How does total taxes as a percentage of GDP in the United States compare to those of Western European countries, such as the United Kingdom, Germany, and Sweden?

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

If a person is taxed $100 on an income of $1,000, taxed $220 on an income of $2,000, and taxed $390 on an income of $3,000, this person is paying a:

Who is recognized as the founder of public choice theory?

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

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

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters