Question 1

Figure 18-1
  
-Refer to Figure 18-1.The excess burden of the tax 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. C

Question 2

Figure 18-6
   
Figure 18-6 shows the Lorenz curves for Islandia and Syldavia.
-Refer to Figure 18-6.Which country has the more unequal distribution of income?

Accepted Answer

A) Islandia 
B) Syldavia 
C) They may have the same absolute income distribution although their relative income distribution is different. 
D) There is insufficient information to answer the question. 
A) Islandia 
B) Syldavia 
C) They may have the same absolute income distribution although their relative income distribution is different. 
D) There is insufficient information to answer the question. B

Question 3

Income inequality increases as the Gini coefficient approaches 1.

Accepted Answer

A) True 
 B)False  True

Question 4

Public schools in the United States get most of their operating funds from

Accepted Answer

A) government production and subsidies. 
B) income taxes on corporate profits. 
C) local property taxes. 
D) tariffs collected on imported goods. 
A) government production and subsidies. 
B) income taxes on corporate profits. 
C) local property taxes. 
D) tariffs collected on imported goods.

Question 5

The largest percentage of federal income tax revenue in the United States is paid by the

Accepted Answer

A) lowest income taxpayers. 
B) middle income taxpayers. 
C) highest income taxpayers. 
D) All groups of taxpayers-low income, high income and middle income-pay the same percent of federal income taxes. 
A) lowest income taxpayers. 
B) middle income taxpayers. 
C) highest income taxpayers. 
D) All groups of taxpayers-low income, high income and middle income-pay the same percent of federal income taxes.

Question 6

Table 18-5
   
Table 18-5 shows the amount of taxes paid on various levels of income.
-Refer to Table 18-5.The tax system is

Accepted Answer

A) progressive throughout all levels of income. 
B) proportional throughout all levels of income. 
C) regressive throughout all levels of income. 
D) regressive between $20,000 and $25,000 of income and progressive between $32,000 and $42,000. 
A) progressive throughout all levels of income. 
B) proportional throughout all levels of income. 
C) regressive throughout all levels of income. 
D) regressive between $20,000 and $25,000 of income and progressive between $32,000 and $42,000.

Question 7

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 8

A proportional tax is a tax for which people with lower incomes

Accepted Answer

A) pay a higher percentage of their incomes in tax than do people with higher incomes. 
B) pay a lower percentage of their incomes in tax than do people with higher incomes. 
C) pay the same percentage of their incomes in tax as do people with higher incomes. 
D) pay the same amount of taxes as people with higher incomes pay. 
A) pay a higher percentage of their incomes in tax than do people with higher incomes. 
B) pay a lower percentage of their incomes in tax than do people with higher incomes. 
C) pay the same percentage of their incomes in tax as do people with higher incomes. 
D) pay the same amount of taxes as people with higher incomes pay.

Question 9

Most economists agree that some of the burden of the corporate income tax

Accepted Answer

A) is reduced because the tax is progressive. 
B) is shared by the federal government. 
C) is reduced because the tax is used to attain a social objective. 
D) is passed on to consumers in the form of higher prices. 
A) is reduced because the tax is progressive. 
B) is shared by the federal government. 
C) is reduced because the tax is used to attain a social objective. 
D) is passed on to consumers in the form of higher prices.

Question 10

If official poverty statistics for the United States included transfer payments individuals receive from the government, such as Social Security payments and other non-cash benefits such as food stamps

Accepted Answer

A) the poverty rate would be lower. 
B) poverty would be eliminated. 
C) income inequality would be greater. 
D) the poverty rate would be overstated. 
A) the poverty rate would be lower. 
B) poverty would be eliminated. 
C) income inequality would be greater. 
D) the poverty rate would be overstated.

Question 11

If the government wants to minimize the welfare loss of a tax, it should tax goods with more inelastic demand curves or supply curves.

Accepted Answer

A) True 
 B)False

Question 12

Figure 18-9
  
-Refer to Figure 18-9 to answer the following questions.
a.Did the distribution of income become more equal in 2016 that it was in 2015, or did it become less equal? Explain.
b.If area A = 1,600, area B = 200, and area C = 3,200, calculate the Gini coefficient for 2015 and the Gini coefficient for 2016.

Accepted Answer

a.The distribution of income became more

Question 13

Interest paid on home mortgages is deductible from individual income taxes.When comparing home owners and renters, the mortgage interest deduction is an example of

Accepted Answer

A) the benefits-received principle. 
B) the ability-to-pay principle. 
C) the horizontal-equity principle. 
D) how the tax code is used to attain a social objective. 
A) the benefits-received principle. 
B) the ability-to-pay principle. 
C) the horizontal-equity principle. 
D) how the tax code is used to attain a social objective.

Question 14

When considering changes in tax policy, economists usually focus on

Accepted Answer

A) the average tax rate. 
B) the marginal tax rate. 
C) people's willingness to pay taxes. 
D) people's ability to pay taxes. 
A) the average tax rate. 
B) the marginal tax rate. 
C) people's willingness to pay taxes. 
D) people's ability to pay taxes.

Question 15

The horizontal-equity principle of taxation is not easy to use in practice because

Accepted Answer

A) some people engage in rent seeking to reduce their taxes below the level other people pay. 
B) people can use tax loopholes to reduce their incomes below the incomes of other taxpayers. 
C) different people receive different levels of government benefits even if their incomes are the same. 
D) it is difficult to determine whether people are in the same economic situation. 
A) some people engage in rent seeking to reduce their taxes below the level other people pay. 
B) people can use tax loopholes to reduce their incomes below the incomes of other taxpayers. 
C) different people receive different levels of government benefits even if their incomes are the same. 
D) it is difficult to determine whether people are in the same economic situation.

Question 16

Figure 18-2
   
Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold,

Accepted Answer

A) the deadweight loss is identical under either supply curve. 
B) the deadweight loss is greater under the supply curve S₁. 
C) the deadweight loss is greater under the supply curve S₀. 
D) there is no deadweight loss since revenue raised is used to fund government projects. 
A) the deadweight loss is identical under either supply curve. 
B) the deadweight loss is greater under the supply curve S₁. 
C) the deadweight loss is greater under the supply curve S₀. 
D) there is no deadweight loss since revenue raised is used to fund government projects.

Question 17

Compare the distribution of income in the United States with the distribution of income in other high-income countries.

Accepted Answer

The United States has the most

Question 18

Table 18-1
   
Suppose $1 billion is available in the budget and Congress is considering allocating the funds to one of the following three alternatives: 1)Subsidies for education, 2)Research on Alzheimer's or 3)Increased border security. Table 18-1 shows three voters' rankings of the alternatives.
-Refer to Table 18-1.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 education subsidies and increased border security,

Accepted Answer

A) Ivy and Jasmine vote for education subsidies, Rose votes for increased border security, and education subsidies wins. 
B) Ivy and Rose vote for increased border security, Jasmine votes for education subsidies, and increased border security wins. 
C) Jasmine and Rose vote for education subsidies, Rose votes for increased border security, and education subsidies wins. 
D) Jasmine and Ivy vote for increased border security, Rose votes for education subsidies, and increased border security wins. 
A) Ivy and Jasmine vote for education subsidies, Rose votes for increased border security, and education subsidies wins. 
B) Ivy and Rose vote for increased border security, Jasmine votes for education subsidies, and increased border security wins. 
C) Jasmine and Rose vote for education subsidies, Rose votes for increased border security, and education subsidies wins. 
D) Jasmine and Ivy vote for increased border security, Rose votes for education subsidies, and increased border security wins.

Question 19

Figure 18-1
  
-Refer to Figure 18-1.The sales tax revenue collected by the government 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 20

The poverty rate is defined as the percentage of the

Accepted Answer

A) labor force that is poor according to the federal government's definition of poverty. 
B) population that is exempt from paying federal income taxes. 
C) population who qualify to receive welfare payments and food stamps. 
D) population that is poor according to the federal government's definition of poverty. 
A) labor force that is poor according to the federal government's definition of poverty. 
B) population that is exempt from paying federal income taxes. 
C) population who qualify to receive welfare payments and food stamps. 
D) population that is poor according to the federal government's definition of poverty.

Figure 18-1 -Refer to Figure 18-1.The excess burden of the tax is represented by the area

Figure 18-6 Figure 18-6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 18-6.Which country has the more unequal distribution of income?

Income inequality increases as the Gini coefficient approaches 1.

Public schools in the United States get most of their operating funds from

The largest percentage of federal income tax revenue in the United States is paid by the

Table 18-5 Table 18-5 shows the amount of taxes paid on various levels of income. -Refer to Table 18-5.The tax system is

The public choice model

A proportional tax is a tax for which people with lower incomes

Most economists agree that some of the burden of the corporate income tax

If official poverty statistics for the United States included transfer payments individuals receive from the government, such as Social Security payments and other non-cash benefits such as food stamps

If the government wants to minimize the welfare loss of a tax, it should tax goods with more inelastic demand curves or supply curves.

Interest paid on home mortgages is deductible from individual income taxes.When comparing home owners and renters, the mortgage interest deduction is an example of

When considering changes in tax policy, economists usually focus on

The horizontal-equity principle of taxation is not easy to use in practice because

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold,

Compare the distribution of income in the United States with the distribution of income in other high-income countries.

Figure 18-1 -Refer to Figure 18-1.The sales tax revenue collected by the government is represented by the area

The poverty rate is defined as the percentage of the

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Filters

Exam 18: Public Choice, Taxes, and the Distribution of Income

Figure 18-1 -Refer to Figure 18-1.The excess burden of the tax is represented by the area

Figure 18-6 Figure 18-6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 18-6.Which country has the more unequal distribution of income?

Income inequality increases as the Gini coefficient approaches 1.

Public schools in the United States get most of their operating funds from

The largest percentage of federal income tax revenue in the United States is paid by the

Table 18-5 Table 18-5 shows the amount of taxes paid on various levels of income. -Refer to Table 18-5.The tax system is

The public choice model

A proportional tax is a tax for which people with lower incomes

Most economists agree that some of the burden of the corporate income tax

If official poverty statistics for the United States included transfer payments individuals receive from the government, such as Social Security payments and other non-cash benefits such as food stamps

If the government wants to minimize the welfare loss of a tax, it should tax goods with more inelastic demand curves or supply curves.

Interest paid on home mortgages is deductible from individual income taxes.When comparing home owners and renters, the mortgage interest deduction is an example of

When considering changes in tax policy, economists usually focus on

The horizontal-equity principle of taxation is not easy to use in practice because

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold,

Compare the distribution of income in the United States with the distribution of income in other high-income countries.

Figure 18-1 -Refer to Figure 18-1.The sales tax revenue collected by the government is represented by the area

The poverty rate is defined as the percentage of the

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Filters