Question 1

Which of the following statements is true?

Accepted Answer

A) If transfer payments such as Social Security payments to the retired and disabled were excluded from official statistics used to estimate the percentage of people with incomes below the poverty line, the amount of poverty in the United States would be much greater. 
B) Because the federal income tax system is progressive, measuring poverty using after-tax incomes results in a higher poverty rate than if poverty is measured using before-tax incomes. 
C) If non-cash benefits such as food stamps and rent subsidies were added to the incomes of low-income families, poverty would be eliminated. 
D) In the United States, income remaining after federal taxes are paid is more equally distributed than income before taxes. 
A) If transfer payments such as Social Security payments to the retired and disabled were excluded from official statistics used to estimate the percentage of people with incomes below the poverty line, the amount of poverty in the United States would be much greater. 
B) Because the federal income tax system is progressive, measuring poverty using after-tax incomes results in a higher poverty rate than if poverty is measured using before-tax incomes. 
C) If non-cash benefits such as food stamps and rent subsidies were added to the incomes of low-income families, poverty would be eliminated. 
D) In the United States, income remaining after federal taxes are paid is more equally distributed than income before taxes.

Question 2

Studies by the U.S.Census Bureau have shown that

Accepted Answer

A) families remain below the poverty line for an average of five years. 
B) there is significant income mobility in the U.S. over time. 
C) income mobility in the U.S. is minimal. 
D) over half the people below the poverty line never move out of poverty. 
A) families remain below the poverty line for an average of five years. 
B) there is significant income mobility in the U.S. over time. 
C) income mobility in the U.S. is minimal. 
D) over half the people below the poverty line never move out of poverty.

Question 3

Congressman Flack votes for a program that will benefit the constituents of Congressman Walpole.Which of the following explanations for Flack's vote is most consistent with the public choice model?

Accepted Answer

A) Congressman Flack did not have time to read and understand all of the legislation he voted on. Members of Congress often depend on their staffs to read proposed legislation and recommend how they should vote. 
B) Legislators such as Congressman Flack are similar to other decision-makers in that they sometimes make irrational choices. 
C) Congressman Flack will support programs of legislators from his own party, regardless of who benefits from these programs. 
D) Congressman Flack expects Congressman Walpole's support for programs that will benefit Flack's constituents. 
A) Congressman Flack did not have time to read and understand all of the legislation he voted on. Members of Congress often depend on their staffs to read proposed legislation and recommend how they should vote. 
B) Legislators such as Congressman Flack are similar to other decision-makers in that they sometimes make irrational choices. 
C) Congressman Flack will support programs of legislators from his own party, regardless of who benefits from these programs. 
D) Congressman Flack expects Congressman Walpole's support for programs that will benefit Flack's constituents.

Question 4

Which of the following groups had the highest poverty rate in 2016 in the United States?

Accepted Answer

A) Asians 
B) blacks 
C) Hispanics 
D) female heads of families 
A) Asians 
B) blacks 
C) Hispanics 
D) female heads of families

Question 5

The Gini coefficient is measured by

Accepted Answer

A) summing up the cumulative income percentages on the Lorenz curve. 
B) summing up the total income earned by the population and dividing by the size of the population. 
C) using the formula: area between perfect inequality and Lorenz curve ÷ area between the line of perfect equality to the Lorenz curve. 
D) using the formula: area between the line of perfect equality and the Lorenz curve ÷ the area under the line of perfect equality. 
A) summing up the cumulative income percentages on the Lorenz curve. 
B) summing up the total income earned by the population and dividing by the size of the population. 
C) using the formula: area between perfect inequality and Lorenz curve ÷ area between the line of perfect equality to the Lorenz curve. 
D) using the formula: area between the line of perfect equality and the Lorenz curve ÷ the area under the line of perfect equality.

Question 6

The median voter theorem states that the outcome of a majority vote

Accepted Answer

A) tends to favor the preferences of high-income individuals and ignore the median voter. 
B) is likely to represent the preferences of society's middle-income voter. 
C) is likely to represent the preferences of the voter who is in the political middle. 
D) is determined by the average consumer and producer in an economy. 
A) tends to favor the preferences of high-income individuals and ignore the median voter. 
B) is likely to represent the preferences of society's middle-income voter. 
C) is likely to represent the preferences of the voter who is in the political middle. 
D) is determined by the average consumer and producer in an economy.

Question 7

Absolute poverty measures vary from country to country.For example, in 2017, the poverty line in the United States for a family of four was an annual income of $24,600, but economists often use a much lower threshold income of $1.25 per day when calculating the rate of poverty in poor countries.Using this $1.25-per-day measure of the poverty line, which of the following regions had the largest percentage decrease in the percentage of the population in poverty from 1970 to 2010?

Accepted Answer

A) Latin America 
B) sub-Saharan Africa 
C) East Asia 
D) the Middle East and North Africa 
A) Latin America 
B) sub-Saharan Africa 
C) East Asia 
D) the Middle East and North Africa

Question 8

Some individuals seek to use government action to make themselves better off at the expense of others.The actions of these individuals

Accepted Answer

A) are examples of fraud; but these individuals usually avoid prosecution because of logrolling and rational ignorance. 
B) are examples of rent seeking. 
C) offer proof that Adam Smith's "invisible hand" is not valid. 
D) are evidence of the voting paradox. 
A) are examples of fraud; but these individuals usually avoid prosecution because of logrolling and rational ignorance. 
B) are examples of rent seeking. 
C) offer proof that Adam Smith's "invisible hand" is not valid. 
D) are evidence of the voting paradox.

Question 9

Suppose, on average, a family in Church Falls earning $60,000 per year paid 6 percent of its income in state taxes.A family earning $80,000 paid, on average, $4,760 in state income taxes.Are state taxes in Church Falls progressive or regressive? Be sure to explain the difference between a progressive tax and a regressive tax.

Accepted Answer

A regressive tax is a tax for which peop

Question 10

In 2016, over 75 percent of the revenue of the U.S.federal government was raised through

Accepted Answer

A) individual income and social insurance taxes. 
B) property and social insurance taxes. 
C) sales and corporate income taxes. 
D) individual income and property taxes. 
A) individual income and social insurance taxes. 
B) property and social insurance taxes. 
C) sales and corporate income taxes. 
D) individual income and property taxes.

Question 11

What is the difference between the poverty line and the poverty rate?

Accepted Answer

The poverty line is the level of annual

Question 12

Define logrolling.Explain why logrolling often results in legislation that benefits the economic interests of a few, while harming the interests of a larger group of people.

Accepted Answer

Logrolling refers to the situation where

Question 13

Explain the effect of price elasticities of supply and demand on tax incidence.

Accepted Answer

If demand is less elastic than

Question 14

The federal government and some state governments levy taxes on specific goods such as gasoline, cigarettes, and beer.These are known as

Accepted Answer

A) sales taxes. 
B) sin taxes. 
C) specific taxes. 
D) excise taxes. 
A) sales taxes. 
B) sin taxes. 
C) specific taxes. 
D) excise taxes.

Question 15

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, the government's revenue from the tax

Accepted Answer

A) is larger if the supply curve is S₀. 
B) is larger if the supply curve is S₁. 
C) is identical under either supply curve. 
D) is not maximized. 
A) is larger if the supply curve is S₀. 
B) is larger if the supply curve is S₁. 
C) is identical under either supply curve. 
D) is not maximized.

Question 16

If, as your taxable income decreases, you pay a larger percentage of your taxable income in taxes, then the tax is

Accepted Answer

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

Question 17

One result of the public choice model is that most economists believe that

Accepted Answer

A) when market failure occurs, government intervention will always lead to a more efficient outcome. 
B) government intervention will always result in a reduction in economic efficiency in regulated markets. 
C) policymakers may have incentives to intervene in the economy in ways that do not promote economic efficiency. 
D) the voting paradox will prevent voters from selecting the best person for public office. 
A) when market failure occurs, government intervention will always lead to a more efficient outcome. 
B) government intervention will always result in a reduction in economic efficiency in regulated markets. 
C) policymakers may have incentives to intervene in the economy in ways that do not promote economic efficiency. 
D) the voting paradox will prevent voters from selecting the best person for public office.

Question 18

When the demand for a product is more elastic than the supply,

Accepted Answer

A) consumers pay the majority of the tax on the product. 
B) consumers pay the entire tax on the product. 
C) firms pay the majority of the tax on the product. 
D) firms pay the entire tax on the product. 
A) consumers pay the majority of the tax on the product. 
B) consumers pay the entire tax on the product. 
C) firms pay the majority of the tax on the product. 
D) firms pay the entire tax on the product.

Question 19

If your income is $92,000 and you pay taxes of $19,475, what is your average tax rate? Show your work.

Accepted Answer

Average tax rate = $

Question 20

Measures of poverty (for example, the poverty line)and the distribution of income (for example, the Lorenz curve and the Gini coefficient)are misleading for which of the following two reasons?

Accepted Answer

A) First, these measures do not take into account income mobility over time. Second, these measures ignore the effects of government programs meant to reduce poverty. 
B) First, none of these measures are adjusted for inflation. Second, they do not measure income on a per capita basis. 
C) First, these measures fail to include the income U.S. citizens earn working for foreign firms that have operations located in the United States. Second, these measures fail to include income foreign citizens earn working for U.S. firms that have operations in foreign countries. 
D) First, these measures fail to include dividend and interest income earned on stocks and bonds. Second, these measures fail to include the value of goods and services citizens make for their own consumption that are not sold in markets. 
A) First, these measures do not take into account income mobility over time. Second, these measures ignore the effects of government programs meant to reduce poverty. 
B) First, none of these measures are adjusted for inflation. Second, they do not measure income on a per capita basis. 
C) First, these measures fail to include the income U.S. citizens earn working for foreign firms that have operations located in the United States. Second, these measures fail to include income foreign citizens earn working for U.S. firms that have operations in foreign countries. 
D) First, these measures fail to include dividend and interest income earned on stocks and bonds. Second, these measures fail to include the value of goods and services citizens make for their own consumption that are not sold in markets.

Which of the following statements is true?

Studies by the U.S.Census Bureau have shown that

Congressman Flack votes for a program that will benefit the constituents of Congressman Walpole.Which of the following explanations for Flack's vote is most consistent with the public choice model?

Which of the following groups had the highest poverty rate in 2016 in the United States?

The Gini coefficient is measured by

The median voter theorem states that the outcome of a majority vote

Some individuals seek to use government action to make themselves better off at the expense of others.The actions of these individuals

In 2016, over 75 percent of the revenue of the U.S.federal government was raised through

What is the difference between the poverty line and the poverty rate?

Define logrolling.Explain why logrolling often results in legislation that benefits the economic interests of a few, while harming the interests of a larger group of people.

Explain the effect of price elasticities of supply and demand on tax incidence.

The federal government and some state governments levy taxes on specific goods such as gasoline, cigarettes, and beer.These are known as

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, the government's revenue from the tax

If, as your taxable income decreases, you pay a larger percentage of your taxable income in taxes, then the tax is

One result of the public choice model is that most economists believe that

When the demand for a product is more elastic than the supply,

If your income is $92,000 and you pay taxes of $19,475, what is your average tax rate? Show your work.

Measures of poverty (for example, the poverty line)and the distribution of income (for example, the Lorenz curve and the Gini coefficient)are misleading for which of the following two reasons?

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

Which of the following statements is true?

Studies by the U.S.Census Bureau have shown that

Congressman Flack votes for a program that will benefit the constituents of Congressman Walpole.Which of the following explanations for Flack's vote is most consistent with the public choice model?

Which of the following groups had the highest poverty rate in 2016 in the United States?

The Gini coefficient is measured by

The median voter theorem states that the outcome of a majority vote

Some individuals seek to use government action to make themselves better off at the expense of others.The actions of these individuals

In 2016, over 75 percent of the revenue of the U.S.federal government was raised through

What is the difference between the poverty line and the poverty rate?

Define logrolling.Explain why logrolling often results in legislation that benefits the economic interests of a few, while harming the interests of a larger group of people.

Explain the effect of price elasticities of supply and demand on tax incidence.

The federal government and some state governments levy taxes on specific goods such as gasoline, cigarettes, and beer.These are known as

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, the government's revenue from the tax

If, as your taxable income decreases, you pay a larger percentage of your taxable income in taxes, then the tax is

One result of the public choice model is that most economists believe that

When the demand for a product is more elastic than the supply,

If your income is $92,000 and you pay taxes of $19,475, what is your average tax rate? Show your work.

Measures of poverty (for example, the poverty line)and the distribution of income (for example, the Lorenz curve and the Gini coefficient)are misleading for which of the following two reasons?

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