Question 1

From 1970 to 2010, the poverty rate in East Asia rose slightly but the level of poverty in sub-Saharan Africa fell dramatically.

Accepted Answer

A) True 
 B)False

Question 2

Holding all other factors constant, income earned from capital is more unequally distributed than income earned from labor.

Accepted Answer

A) True 
 B)False

Question 3

The sales 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 4

The term tax incidence refers to

Accepted Answer

A) the degree of progression of a tax. 
B) the actual division of the burden of a tax between buyers and sellers in a market. 
C) the amount of revenue government collects from a tax imposed on a good or service. 
D) whether the burden of a tax rests more heavily on those with higher incomes or those with lower incomes. 
A) the degree of progression of a tax. 
B) the actual division of the burden of a tax between buyers and sellers in a market. 
C) the amount of revenue government collects from a tax imposed on a good or service. 
D) whether the burden of a tax rests more heavily on those with higher incomes or those with lower incomes.

Question 5

What is the term that explains why voters often lack knowledge of pending legislation, and lack knowledge of the views of candidates for office on a range of issues that affect their own (the voters')welfare?

Accepted Answer

A) the voting paradox 
B) logrolling 
C) rational ignorance 
D) regulatory capture 
A) the voting paradox 
B) logrolling 
C) rational ignorance 
D) regulatory capture

Question 6

Both Presidents Kennedy and Reagan proposed significant cuts in income taxes because

Accepted Answer

A) at the time of their proposals the federal government was experiencing budget surpluses; that is, tax revenue exceeded government expenditures. 
B) they wanted to offset their proposals to increase other taxes. 
C) state governments had increased their taxes and they believed the tax cuts they proposed would result in most citizens paying about the same total state and federal taxes. 
D) they believed that the tax cuts would enhance economic efficiency. 
A) at the time of their proposals the federal government was experiencing budget surpluses; that is, tax revenue exceeded government expenditures. 
B) they wanted to offset their proposals to increase other taxes. 
C) state governments had increased their taxes and they believed the tax cuts they proposed would result in most citizens paying about the same total state and federal taxes. 
D) they believed that the tax cuts would enhance economic efficiency.

Question 7

Economists often analyze the interaction of individuals and firms in markets.Economists also examine the actions of individuals and firms as they attempt to use government to make themselves better off at the expense of others, a process that is referred to as

Accepted Answer

A) rent seeking. 
B) logrolling. 
C) government failure. 
D) the public choice initiative. 
A) rent seeking. 
B) logrolling. 
C) government failure. 
D) the public choice initiative.

Question 8

Table 18-3
  
-Refer to Table 18-3.The table above outlines the rankings of three members of the U.S.Senate on three spending alternatives.Assume that Congress can spend additional revenue on only one of the three spending alternatives and that Bart, Lisa, and Maggie, all members of the Senate, participate in a series of votes in which they are to determine which of the spending alternatives should receive funding.Three votes will be taken: (1)Immigration Reform and Unemployment Benefits (2)Immigration Reform and Social Security Reform and (3)Unemployment Benefits and Social Security Reform.
Show the results of each vote and determine whether the voting paradox will occur as a result of these votes.

Accepted Answer

First vote:
 @#IMG-DLM& 
First vote: the majority

Question 9

If the marginal tax rate is less than 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 10

Between 1970 and 2010, the poverty rate in East Asia declined dramatically from about 60 percent to less than 1 percent, while the poverty rate in sub-Saharan Africa decreased from 40 percent to only 24 percent.The main reason for this is that

Accepted Answer

A) the population growth rate decreased in East Asia and increased in sub-Saharan Africa. 
B) Governments in East Asia increased transfer payments to poor families over this period of time. The governments of sub-Saharan Africa had practically no transfer payment programs from 1970 to 2010. 
C) The countries of East Asia have progressive income tax systems. The countries of sub-Saharan Africa all have regressive income tax systems. 
D) East Asia experienced higher economic growth than sub-Saharan Africa. 
A) the population growth rate decreased in East Asia and increased in sub-Saharan Africa. 
B) Governments in East Asia increased transfer payments to poor families over this period of time. The governments of sub-Saharan Africa had practically no transfer payment programs from 1970 to 2010. 
C) The countries of East Asia have progressive income tax systems. The countries of sub-Saharan Africa all have regressive income tax systems. 
D) East Asia experienced higher economic growth than sub-Saharan Africa.

Question 11

Which of the following statements refers to rent seeking?

Accepted Answer

A) "Laws passed by the federal government often provide benefits for a small number of individuals. These individuals, in turn, have an incentive to contribute to the campaigns of politicians who pass these laws." 
B) "The federal government should spend more money on programs that help low income citizens and less money on national defense." 
C) "The role of the federal government in the U.S. economy grew significantly after the Great Depression. Government spending and taxes are a much greater proportion of total income today than they were in 1929." 
D) "There is an opportunity cost whenever the federal government spends tax revenue. For example, an additional $1 billion spent on national defense means there will be less revenue for highway construction and maintenance or some other program." 
A) "Laws passed by the federal government often provide benefits for a small number of individuals. These individuals, in turn, have an incentive to contribute to the campaigns of politicians who pass these laws." 
B) "The federal government should spend more money on programs that help low income citizens and less money on national defense." 
C) "The role of the federal government in the U.S. economy grew significantly after the Great Depression. Government spending and taxes are a much greater proportion of total income today than they were in 1929." 
D) "There is an opportunity cost whenever the federal government spends tax revenue. For example, an additional $1 billion spent on national defense means there will be less revenue for highway construction and maintenance or some other program."

Question 12

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, what is the size of the deadweight loss, if there is any?

Accepted Answer

A) the area adc if the supply curve is S₀ and the area bec if the supply curve is S₁. 
B) the area afcd if the supply curve is S₀ and the area bfce if the supply curve is S₁. 
C) the area becf under either supply curve. 
D) There is no deadweight loss; revenue raised is used to fund government projects. 
A) the area adc if the supply curve is S₀ and the area bec if the supply curve is S₁. 
B) the area afcd if the supply curve is S₀ and the area bfce if the supply curve is S₁. 
C) the area becf under either supply curve. 
D) There is no deadweight loss; revenue raised is used to fund government projects.

Question 13

The actual division of the burden of a tax is called

Accepted Answer

A) tax credit. 
B) tax incidence. 
C) excess burden. 
D) tax dispersion. 
A) tax credit. 
B) tax incidence. 
C) excess burden. 
D) tax dispersion.

Question 14

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 research on Alzheimer's and increased border security,

Accepted Answer

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

Question 15

Table 18-9
   
Table 18-9 shows the income tax brackets and tax rates for single taxpayers in Monrovia.
-Refer to Table 18-9.Sylvia is a single taxpayer with an income of $70,000.What is her marginal tax rate and what is her average tax rate?

Accepted Answer

A) marginal tax rate = 30%; average tax rate = 30% 
B) marginal tax rate = 8%; average tax rate = 19.3% 
C) marginal tax rate = 30%; average tax rate = 22.5% 
D) marginal tax rate = 20%; average tax rate = 30% 
A) marginal tax rate = 30%; average tax rate = 30% 
B) marginal tax rate = 8%; average tax rate = 19.3% 
C) marginal tax rate = 30%; average tax rate = 22.5% 
D) marginal tax rate = 20%; average tax rate = 30%

Question 16

Which of the following is a transfer payment?

Accepted Answer

A) a regressive tax 
B) a tax deduction 
C) Social Security payments 
D) an excise tax 
A) a regressive tax 
B) a tax deduction 
C) Social Security payments 
D) an excise tax

Question 17

For the top 1 percent of income distribution, the share of federal individual income taxes paid by households in this group in 2015 was ________ percent.

Accepted Answer

A) 9 
B) 17 
C) 44 
D) 68 
A) 9 
B) 17 
C) 44 
D) 68

Question 18

What is the difference between the voting paradox and the Arrow impossibility theorem?

Accepted Answer

The voting paradox is the failure of maj

Question 19

What is rent seeking and how is it related to regulatory capture?

Accepted Answer

Rent seeking is the attempt by individua

Question 20

Table 18-6
   
Table 18-6 shows the income tax brackets and tax rates for single taxpayers in Calpernia.
-Refer to Table 18-6.Sasha is a single taxpayer with an income of $60,000.What is his marginal tax rate and what is his average tax rate?

Accepted Answer

A) marginal tax rate = 38%; average tax rate = 23% 
B) marginal tax rate = 17%; average tax rate = 21% 
C) marginal tax rate = 38%; average tax rate = 24% 
D) marginal tax rate = 23%; average tax rate = 38% 
A) marginal tax rate = 38%; average tax rate = 23% 
B) marginal tax rate = 17%; average tax rate = 21% 
C) marginal tax rate = 38%; average tax rate = 24% 
D) marginal tax rate = 23%; average tax rate = 38%

From 1970 to 2010, the poverty rate in East Asia rose slightly but the level of poverty in sub-Saharan Africa fell dramatically.

Holding all other factors constant, income earned from capital is more unequally distributed than income earned from labor.

The sales tax

The term tax incidence refers to

What is the term that explains why voters often lack knowledge of pending legislation, and lack knowledge of the views of candidates for office on a range of issues that affect their own (the voters')welfare?

Both Presidents Kennedy and Reagan proposed significant cuts in income taxes because

Economists often analyze the interaction of individuals and firms in markets.Economists also examine the actions of individuals and firms as they attempt to use government to make themselves better off at the expense of others, a process that is referred to as

If the marginal tax rate is less than the average tax rate as taxable income increases, the tax structure is

Between 1970 and 2010, the poverty rate in East Asia declined dramatically from about 60 percent to less than 1 percent, while the poverty rate in sub-Saharan Africa decreased from 40 percent to only 24 percent.The main reason for this is that

Which of the following statements refers to rent seeking?

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, what is the size of the deadweight loss, if there is any?

The actual division of the burden of a tax is called

Table 18-9 Table 18-9 shows the income tax brackets and tax rates for single taxpayers in Monrovia. -Refer to Table 18-9.Sylvia is a single taxpayer with an income of $70,000.What is her marginal tax rate and what is her average tax rate?

Which of the following is a transfer payment?

For the top 1 percent of income distribution, the share of federal individual income taxes paid by households in this group in 2015 was ________ percent.

What is the difference between the voting paradox and the Arrow impossibility theorem?

What is rent seeking and how is it related to regulatory capture?

Table 18-6 Table 18-6 shows the income tax brackets and tax rates for single taxpayers in Calpernia. -Refer to Table 18-6.Sasha is a single taxpayer with an income of $60,000.What is his marginal tax rate and what is his average tax rate?

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

From 1970 to 2010, the poverty rate in East Asia rose slightly but the level of poverty in sub-Saharan Africa fell dramatically.

Holding all other factors constant, income earned from capital is more unequally distributed than income earned from labor.

The sales tax

The term tax incidence refers to

What is the term that explains why voters often lack knowledge of pending legislation, and lack knowledge of the views of candidates for office on a range of issues that affect their own (the voters')welfare?

Both Presidents Kennedy and Reagan proposed significant cuts in income taxes because

Economists often analyze the interaction of individuals and firms in markets.Economists also examine the actions of individuals and firms as they attempt to use government to make themselves better off at the expense of others, a process that is referred to as

If the marginal tax rate is less than the average tax rate as taxable income increases, the tax structure is

Between 1970 and 2010, the poverty rate in East Asia declined dramatically from about 60 percent to less than 1 percent, while the poverty rate in sub-Saharan Africa decreased from 40 percent to only 24 percent.The main reason for this is that

Which of the following statements refers to rent seeking?

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, what is the size of the deadweight loss, if there is any?

The actual division of the burden of a tax is called

Table 18-9 Table 18-9 shows the income tax brackets and tax rates for single taxpayers in Monrovia. -Refer to Table 18-9.Sylvia is a single taxpayer with an income of $70,000.What is her marginal tax rate and what is her average tax rate?

Which of the following is a transfer payment?

For the top 1 percent of income distribution, the share of federal individual income taxes paid by households in this group in 2015 was ________ percent.

What is the difference between the voting paradox and the Arrow impossibility theorem?

What is rent seeking and how is it related to regulatory capture?

Table 18-6 Table 18-6 shows the income tax brackets and tax rates for single taxpayers in Calpernia. -Refer to Table 18-6.Sasha is a single taxpayer with an income of $60,000.What is his marginal tax rate and what is his average tax rate?

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