Question 1

If you pay a constant percentage of your taxable income in taxes, the tax is

Accepted Answer

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

Question 2

One argument advanced in favour of reducing corporate income tax rates is

Accepted Answer

A) corporations increase the wealth of shareholder's which contribute to increases in GDP. 
B) reducing corporate income tax will lead to a higher capital stock and a higher standard of living. 
C) corporate dividends accrue mostly to middle-income and low-income investors who are already paying heavy income taxes. 
D) corporate income tax is illegal. 
A) corporations increase the wealth of shareholder's which contribute to increases in GDP. 
B) reducing corporate income tax will lead to a higher capital stock and a higher standard of living. 
C) corporate dividends accrue mostly to middle-income and low-income investors who are already paying heavy income taxes. 
D) corporate income tax is illegal.

Question 3

If the marginal tax rate is greater than the average tax rate, the tax structure is described as regressive.

Accepted Answer

A) True 
 B)False

Question 4

Figure 15.5
   
Figure 15.5 shows the Lorenz curves for Islandia and Syldavia.
-Refer to Figure 15.5.If area X = 2,060, area Y = 240, and area Z = 2,700, calculate the Gini coefficient for Islandia.

Accepted Answer

A) 0.41 
B) 0.45 
C) 0.70 
D) 0.76 
A) 0.41 
B) 0.45 
C) 0.70 
D) 0.76

Question 5

What is logrolling?

Accepted Answer

A) a situation where a policymaker votes to approve a bill in exchange for favorable votes from his colleagues on other bills 
B) a situation where policymakers transfer resources from those voters who are unlikely to have a huge impact on the political outcome to those who contribute to political campaigns 
C) a situation where a policymaker accepts bribes to prevent proposed legislation from coming to a vote 
D) a situation where a policymaker gets the government to fund a non-essential project benefiting her family members 
A) a situation where a policymaker votes to approve a bill in exchange for favorable votes from his colleagues on other bills 
B) a situation where policymakers transfer resources from those voters who are unlikely to have a huge impact on the political outcome to those who contribute to political campaigns 
C) a situation where a policymaker accepts bribes to prevent proposed legislation from coming to a vote 
D) a situation where a policymaker gets the government to fund a non-essential project benefiting her family members

Question 6

Logrolling may result in

Accepted Answer

A) legislation that yields economy-wide benefits, the funding for which is borne primarily by a few of the smallest states. 
B) a majority of Parliament supporting legislation that benefits the economic interests of a few, while harming the economic interests of a much larger group. 
C) members of Parliament selling their votes on proposed legislation to the highest bidder. 
D) creating limited incentives for policymakers to consider the immediate consequences of their proposed legislation. 
A) legislation that yields economy-wide benefits, the funding for which is borne primarily by a few of the smallest states. 
B) a majority of Parliament supporting legislation that benefits the economic interests of a few, while harming the economic interests of a much larger group. 
C) members of Parliament selling their votes on proposed legislation to the highest bidder. 
D) creating limited incentives for policymakers to consider the immediate consequences of their proposed legislation.

Question 7

Figure 15.1
  
-Refer to Figure 15.1.Of the tax revenue collected by the government, the portion borne by consumers is represented by the area

Accepted Answer

A) B + C. 
B) F + G. 
C) E + H. 
D) B + C + F + G. 
A) B + C. 
B) F + G. 
C) E + H. 
D) B + C + F + G.

Question 8

If the marginal tax rate is equal to the average tax rate as taxable income increases, the tax structure is

Accepted Answer

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

Question 9

Describe each of the principles governments consider when deciding which taxes to use.

Accepted Answer

In deciding which taxes to use, a govern

Question 10

If voters lack an economic incentive to become informed about pending legislation, then their preferences become a constraint on legislators voting for rent-seeking legislation.

Accepted Answer

A) True 
 B)False

Question 11

Tax laws affect

Accepted Answer

A) economic efficiency but not equity. 
B) equity but not economic efficiency. 
C) consumption and production, not efficiency and equity. 
D) both efficiency and equity. 
A) economic efficiency but not equity. 
B) equity but not economic efficiency. 
C) consumption and production, not efficiency and equity. 
D) both efficiency and equity.

Question 12

Which of the following tax systems would help reduce income inequality the most?

Accepted Answer

A) a regressive tax system 
B) a proportional tax system 
C) a progressive tax system 
D) a consumption tax system 
A) a regressive tax system 
B) a proportional tax system 
C) a progressive tax system 
D) a consumption tax system

Question 13

What are the two types of taxes that working individuals pay on their earnings?

Accepted Answer

A) individual income tax and sales tax 
B) payroll tax and sales tax 
C) individual income tax and social insurance premium 
D) property tax and payroll tax 
A) individual income tax and sales tax 
B) payroll tax and sales tax 
C) individual income tax and social insurance premium 
D) property tax and payroll tax

Question 14

One argument advanced in favour of raising corporate income taxes is

Accepted Answer

A) dividends increase the wealth of shareholder's which could lead to inflation. 
B) the tax revenue gained can be used to pay for social programs. 
C) corporate dividends accrue mostly to low income individuals, thus increasing income inequality. 
D) it increases the incentive for corporations to maximize shareholder value. 
A) dividends increase the wealth of shareholder's which could lead to inflation. 
B) the tax revenue gained can be used to pay for social programs. 
C) corporate dividends accrue mostly to low income individuals, thus increasing income inequality. 
D) it increases the incentive for corporations to maximize shareholder value.

Question 15

Table 15.1
 $\begin{array}{|c|c|c|c|} 
\hline & \text { Ivy } & \text { Jasmine } & \text { Rose } \
\hline \text { Subsidies for education } & \text { 2nd } & \text { 3rd } & \text { 1st } \
\hline \text { Research on Alzheimer's } & \text { 3rd } & \text { 1st } & \text { 2nd } \
\hline \text { Subsidies for daycare } & 1 \text { st } & \text { 2nd } & \text { 3rd }\
\hline
\end{array}$ 
Suppose $1 billion is available in the budget and Parliament is considering allocating the funds to one of the following three alternatives: 1)Subsidies for education, 2)Research on Alzheimer's or 3)Subsidies for daycare. Table 15.1 shows three voters' rankings of the alternatives.
-Refer to Table 15.1.Suppose a series of votes are taken in which each pair of alternatives is considered in turn.If the vote is between allocating funds to research on Alzheimer's and subsidies for daycare,

Accepted Answer

A) Ivy and Jasmine vote for Alzheimer's research, Rose votes for increased subsidies for daycare, and Alzheimer's research wins. 
B) Ivy and Rose vote for increased subsidies for daycare, Jasmine votes for Alzheimer's research, and increased increased subsidies for daycare wins. 
C) Jasmine and Rose vote for Alzheimer's research, Ivy votes for increased subsidies for daycare, and Alzheimer's research wins. 
D) Jasmine and Ivy vote for increased subsidies for daycare, Rose votes for Alzheimer's research, and increased subsidies for daycare wins. 
A) Ivy and Jasmine vote for Alzheimer's research, Rose votes for increased subsidies for daycare, and Alzheimer's research wins. 
B) Ivy and Rose vote for increased subsidies for daycare, Jasmine votes for Alzheimer's research, and increased increased subsidies for daycare wins. 
C) Jasmine and Rose vote for Alzheimer's research, Ivy votes for increased subsidies for daycare, and Alzheimer's research wins. 
D) Jasmine and Ivy vote for increased subsidies for daycare, Rose votes for Alzheimer's research, and increased subsidies for daycare wins.

Question 16

The federal goods and services tax

Accepted Answer

A) is consistent with the benefits-received principle because low-income individuals spend less on goods and services than do high-income people. 
B) is not consistent with the ability-to-pay principle because low-income individuals tend to spend a larger fraction of their income than do high-income individuals. 
C) is not consistent with the ability-to-pay principle because low-income individuals tend to purchase a smaller bundle of goods and services compared to high-income individuals. 
D) is not consistent with the benefits-received principle because low-income individuals spend less on goods and services than do high-income individuals, yet pay the same sales tax rate. 
A) is consistent with the benefits-received principle because low-income individuals spend less on goods and services than do high-income people. 
B) is not consistent with the ability-to-pay principle because low-income individuals tend to spend a larger fraction of their income than do high-income individuals. 
C) is not consistent with the ability-to-pay principle because low-income individuals tend to purchase a smaller bundle of goods and services compared to high-income individuals. 
D) is not consistent with the benefits-received principle because low-income individuals spend less on goods and services than do high-income individuals, yet pay the same sales tax rate.

Question 17

The public choice model

Accepted Answer

A) examines the degree of market power that the public exerts in a market economy. 
B) examines the public's role in appointing politicians and ensuring that elected officials act in ways to reflect the public's preferences. 
C) applies economic analysis to government decision making. 
D) applies economic analysis to the collective decision making of consumers. 
A) examines the degree of market power that the public exerts in a market economy. 
B) examines the public's role in appointing politicians and ensuring that elected officials act in ways to reflect the public's preferences. 
C) applies economic analysis to government decision making. 
D) applies economic analysis to the collective decision making of consumers.

Question 18

Is a typical person likely to gather more information when buying a new computer or when voting for a member of Parliament? Why?

Accepted Answer

The typical person is likely to gather m

Question 19

What is the poverty rate?

Accepted Answer

A) the rate at which the number of people relative to the size of the population fall below the poverty line 
B) the percentage of the population earning an annual income below the low income cut-off 
C) the percentage of working adults whose annual income is sufficiently low as to be are exempt from paying income taxes 
D) the percentage of households who qualify for government assistance to meet the minimal requirement for adequate nutrition 
A) the rate at which the number of people relative to the size of the population fall below the poverty line 
B) the percentage of the population earning an annual income below the low income cut-off 
C) the percentage of working adults whose annual income is sufficiently low as to be are exempt from paying income taxes 
D) the percentage of households who qualify for government assistance to meet the minimal requirement for adequate nutrition

Question 20

The Arrow impossibility theorem states that

Accepted Answer

A) no system of voting can be devised that will always consistently represent the underlying preferences of voters. 
B) it is impossible for a majority voting system not to consistently represent the preferences of voters. 
C) it is impossible to separate corporate desires from public bureaucracy. 
D) no system of voting can be devised that will ensure a 100 percent voter turnout. 
A) no system of voting can be devised that will always consistently represent the underlying preferences of voters. 
B) it is impossible for a majority voting system not to consistently represent the preferences of voters. 
C) it is impossible to separate corporate desires from public bureaucracy. 
D) no system of voting can be devised that will ensure a 100 percent voter turnout.

If you pay a constant percentage of your taxable income in taxes, the tax is

One argument advanced in favour of reducing corporate income tax rates is

If the marginal tax rate is greater than the average tax rate, the tax structure is described as regressive.

Figure 15.5 Figure 15.5 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 15.5.If area X = 2,060, area Y = 240, and area Z = 2,700, calculate the Gini coefficient for Islandia.

What is logrolling?

Logrolling may result in

Figure 15.1 -Refer to Figure 15.1.Of the tax revenue collected by the government, the portion borne by consumers is represented by the area

If the marginal tax rate is equal to the average tax rate as taxable income increases, the tax structure is

Describe each of the principles governments consider when deciding which taxes to use.

If voters lack an economic incentive to become informed about pending legislation, then their preferences become a constraint on legislators voting for rent-seeking legislation.

Tax laws affect

Which of the following tax systems would help reduce income inequality the most?

What are the two types of taxes that working individuals pay on their earnings?

One argument advanced in favour of raising corporate income taxes is

The federal goods and services tax

The public choice model

Is a typical person likely to gather more information when buying a new computer or when voting for a member of Parliament? Why?

What is the poverty rate?

The Arrow impossibility theorem states that

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labour and Other Factors of Production

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters

Exam 15: Public Choice, Taxes, and the Distribution of Income

If you pay a constant percentage of your taxable income in taxes, the tax is

One argument advanced in favour of reducing corporate income tax rates is

If the marginal tax rate is greater than the average tax rate, the tax structure is described as regressive.

Figure 15.5 Figure 15.5 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 15.5.If area X = 2,060, area Y = 240, and area Z = 2,700, calculate the Gini coefficient for Islandia.

What is logrolling?

Logrolling may result in

Figure 15.1 -Refer to Figure 15.1.Of the tax revenue collected by the government, the portion borne by consumers is represented by the area

If the marginal tax rate is equal to the average tax rate as taxable income increases, the tax structure is

Describe each of the principles governments consider when deciding which taxes to use.

If voters lack an economic incentive to become informed about pending legislation, then their preferences become a constraint on legislators voting for rent-seeking legislation.

Tax laws affect

Which of the following tax systems would help reduce income inequality the most?

What are the two types of taxes that working individuals pay on their earnings?

One argument advanced in favour of raising corporate income taxes is

The federal goods and services tax

The public choice model

Is a typical person likely to gather more information when buying a new computer or when voting for a member of Parliament? Why?

What is the poverty rate?

The Arrow impossibility theorem states that

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labour and Other Factors of Production

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters