Question 1

Which of the following offers theories to explain why the government, like the private sector, may also "fail"?

Accepted Answer

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

Question 2

The choice of a voter to remain uninformed because the marginal cost of obtaining information is greater than the marginal benefit from obtaining knowledge is called:

Accepted Answer

A)  irrational ignorance. 
B)  rational ignorance. 
C)  collective interest. 
D)  choice. 
A)  irrational ignorance. 
B)  rational ignorance. 
C)  collective interest. 
D)  choice.

Question 3

Government expenditures are different from the government national income account (G) in that:

Accepted Answer

A)  government expenditures includes transfer payments while G does not. 
B)  government expenditures are net of tax revenue while G is not. 
C)  G includes transfer payments while government expenditures does not. 
D)  G includes spending for defense, highways, and education while government expenditures does not. 
A)  government expenditures includes transfer payments while G does not. 
B)  government expenditures are net of tax revenue while G is not. 
C)  G includes transfer payments while government expenditures does not. 
D)  G includes spending for defense, highways, and education while government expenditures does not.

Question 4

Income security expenditures include

Accepted Answer

A)  Medicare, Social Security, and unemployment compensation. 
B)  Social Security and disability benefits, but not Medicare. 
C)  unemployment compensation, disability benefits, and Medicare, but not Social Security. 
D)  transfer payments to the disadvantaged, but not transfer payments to the elderly. 
A)  Medicare, Social Security, and unemployment compensation. 
B)  Social Security and disability benefits, but not Medicare. 
C)  unemployment compensation, disability benefits, and Medicare, but not Social Security. 
D)  transfer payments to the disadvantaged, but not transfer payments to the elderly.

Question 5

Consider two people, Sandy Ross, who earns $25,000, and Gary Belcher, who earns $50,000. If the flat-tax rate is 20 percent, then:

Accepted Answer

A)  the government collects a total of $20,000. 
B)  Gary pays twice the tax amount Sandy pays. 
C)  Gary pays three times the tax amount Sandy pays. 
D)  Gary and Sandy pay exactly the same tax amount. 
A)  the government collects a total of $20,000. 
B)  Gary pays twice the tax amount Sandy pays. 
C)  Gary pays three times the tax amount Sandy pays. 
D)  Gary and Sandy pay exactly the same tax amount.

Question 6

When the tax structure of a nation is progressive, as incomes increase, the tax rate:

Accepted Answer

A)  declines. 
B)  remains the same. 
C)  increases. 
D)  is proportional. 
A)  declines. 
B)  remains the same. 
C)  increases. 
D)  is proportional.

Question 7

Which of the following lists tax revenue sources from greatest to least?

Accepted Answer

A)  individual income taxes, social insurance taxes, corporate income taxes, excise and other taxes 
B)  corporate income taxes, social insurance taxes, individual income taxes, excise and other taxes 
C)  individual income taxes, corporate income taxes, social insurance taxes, excise and other taxes 
D)  social insurance taxes, excise and other taxes, individual income taxes, corporate income taxes 
A)  individual income taxes, social insurance taxes, corporate income taxes, excise and other taxes 
B)  corporate income taxes, social insurance taxes, individual income taxes, excise and other taxes 
C)  individual income taxes, corporate income taxes, social insurance taxes, excise and other taxes 
D)  social insurance taxes, excise and other taxes, individual income taxes, corporate income taxes

Question 8

Suppose George's income is $10,000 and he pays a tax of $1,000, but Laura's income is $50,000 and she pays a tax of $4,000. Such a tax is:

Accepted Answer

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

Question 9

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

Accepted Answer

Public choice theory emphasizes the poss

Question 10

A tax that is structured so that people pay the same percentage of their income in taxes is called a(n):

Accepted Answer

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

Question 11

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 smaller dollar burden on the poor than the rich. 
B)  Government failure may occur if voters are rationally ignorant. 
C)  Special-interest group political pressure results only from programs for which benefits outweigh costs. 
D)  Majority-rule voting and benefit-cost analysis result in the same projects being undertaken. 
A)  Sales, excise, and flat-rate taxes violate the ability-to-pay principle of taxation fairness because each results in a smaller dollar burden on the poor than the rich. 
B)  Government failure may occur if voters are rationally ignorant. 
C)  Special-interest group political pressure results only from programs for which benefits outweigh costs. 
D)  Majority-rule voting and benefit-cost analysis result in the same projects being undertaken.

Question 12

Which of the following statements best answers the question of how burdensome overall taxation is in the United States?

Accepted Answer

A)  An excise tax is a sales tax on a particular good or service. 
B)  The largest source of revenue for the federal government is individual income taxes. 
C)  Countries that tax more heavily are expected to provide more public services. 
D)  By international standards, U.S. citizens are among the most lightly taxed people in the industrialized world. 
A)  An excise tax is a sales tax on a particular good or service. 
B)  The largest source of revenue for the federal government is individual income taxes. 
C)  Countries that tax more heavily are expected to provide more public services. 
D)  By international standards, U.S. citizens are among the most lightly taxed people in the industrialized world.

Question 13

Jan has an income of $30,000 and pays $4,500 in taxes. When Jan's income rises to $40,000, her tax bill rises to $6,500. What is Jan's marginal tax rate?

Accepted Answer

A)  5 percent. 
B)  15 percent. 
C)  16.25 percent. 
D)  20 percent. 
A)  5 percent. 
B)  15 percent. 
C)  16.25 percent. 
D)  20 percent.

Question 14

According to the shortsightedness effect, politicians tend to favor projects with:

Accepted Answer

A)  short-run benefits and short-run costs. 
B)  short-run benefits and long-run costs. 
C)  long-run benefits and short-run costs. 
D)  long-run benefits and long-run costs. 
A)  short-run benefits and short-run costs. 
B)  short-run benefits and long-run costs. 
C)  long-run benefits and short-run costs. 
D)  long-run benefits and long-run costs.

Question 15

Exhibit 16-1 Income for two persons $$\begin{array} { | l | r | } 
\hline \text { Name } & \text { Income } \
\hline \text { Elaine } & \$ 100,000 \
\text { Daniel } & \$ 40,000 \
\hline
\end{array}$$
In Exhibit 16-1, if the income tax system is progressive, 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 have tax bills that are different sizes. 
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. 
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 have tax bills that are different sizes. 
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.

Which of the following offers theories to explain why the government, like the private sector, may also "fail"?

The choice of a voter to remain uninformed because the marginal cost of obtaining information is greater than the marginal benefit from obtaining knowledge is called:

Government expenditures are different from the government national income account (G) in that:

Income security expenditures include

Consider two people, Sandy Ross, who earns $25,000, and Gary Belcher, who earns $50,000. If the flat-tax rate is 20 percent, then:

When the tax structure of a nation is progressive, as incomes increase, the tax rate:

Which of the following lists tax revenue sources from greatest to least?

Suppose George's income is $10,000 and he pays a tax of $1,000, but Laura's income is $50,000 and she pays a tax of $4,000. Such a tax is:

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

A tax that is structured so that people pay the same percentage of their income in taxes is called a(n):

Which of the following statements is true ?

Which of the following statements best answers the question of how burdensome overall taxation is in the United States?

Jan has an income of $30,000 and pays $4,500 in taxes. When Jan's income rises to $40,000, her tax bill rises to $6,500. What is Jan's marginal tax rate?

According to the shortsightedness effect, politicians tend to favor projects with:

Exhibit 16-1 Income for two persons Name Income Elaine \ 100,000 Daniel \ 40,000 In Exhibit 16-1, if the income tax system is progressive, then:

Introducing the Economic Way of Thinking

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

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

Monetary Policy

International Trade and Finance

Economies in Transition

Growth and the Less Developed Countries

Filters

Exam 16: The Public Sector

Which of the following offers theories to explain why the government, like the private sector, may also "fail"?

The choice of a voter to remain uninformed because the marginal cost of obtaining information is greater than the marginal benefit from obtaining knowledge is called:

Government expenditures are different from the government national income account (G) in that:

Income security expenditures include

Consider two people, Sandy Ross, who earns $25,000, and Gary Belcher, who earns $50,000. If the flat-tax rate is 20 percent, then:

When the tax structure of a nation is progressive, as incomes increase, the tax rate:

Which of the following lists tax revenue sources from greatest to least?

Suppose George's income is $10,000 and he pays a tax of $1,000, but Laura's income is $50,000 and she pays a tax of $4,000. Such a tax is:

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

A tax that is structured so that people pay the same percentage of their income in taxes is called a(n):

Which of the following statements is true ?

Which of the following statements best answers the question of how burdensome overall taxation is in the United States?

Jan has an income of $30,000 and pays $4,500 in taxes. When Jan's income rises to $40,000, her tax bill rises to $6,500. What is Jan's marginal tax rate?

According to the shortsightedness effect, politicians tend to favor projects with:

Exhibit 16-1 Income for two persons Name Income Elaine \ 100,000 Daniel \ 40,000 In Exhibit 16-1, if the income tax system is progressive, then:

Introducing the Economic Way of Thinking

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

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

Monetary Policy

International Trade and Finance

Economies in Transition

Growth and the Less Developed Countries

Filters