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

Consider the following methods of taxing a corporation's income: A.A flat tax, as opposed to a progressive tax, is levied on corporate profits. B.A system whereby a corporation calculates its annual profit and notifies each shareholder of her portion of the profits.The shareholder would then be required to include this amount as taxable income for her personal income tax.The corporation does not pay a tax. C.A system where the federal government continues to tax corporate income through the corporate income tax but allows individual taxpayers to receive, tax free, corporate dividends and capital gains. Which of the methods above would avoid double taxation?

As the value of the Gini coefficient approaches one,

The public choice model can be used to examine voting models that contrast the manner in which collective decisions are made by governments (state, local, and federal)and the manner in which individual choices are made in markets.Which of the following descriptions is consistent with the difference between collective decision-making and decision-making in markets?

What is the United States government's formal definition of the poverty line?

Which of the following is an example of a federal mandate?

Some economists who use the public choice model to explain the ways government intervenes in the economy believe that regulatory capture results when an agency or commission is given authority over a particular industry or product.Which of the following is the best example of regulatory capture?

Economist Kenneth Arrow has shown mathematically that no system of voting will consistently represent the underlying preferences of voters.This finding is called

For the top 1 percent of income distribution, the share of total income earned by households in this group was about ________ percent in 2016.

Figure 18-3 -Refer to Figure 18-3.The figure above shows a demand curve and two supply curves, one more elastic than the other.Use Figure 18-3 to answer the following questions. a.Suppose the government imposes an excise tax of $1.00 on every unit sold.Use the graph to illustrate the impact of this tax when the supply curve is S₁ and when the supply curve is S₂. b.If the government imposes an excise tax of $1.00 on every unit sold, will the consumer pay more of the tax if the supply curve is S₁ or S₂? Refer to the graphs in your answer. c.If an excise tax of $1.00 on every unit sold is imposed, will the revenue collected by the government be greater if the supply curve is S₁ or S₂? d.If the government imposes an excise tax of $1.00 on every unit sold, will the deadweight loss be greater if the supply curve is S₁ or S₂?

Which of the following statements about rent seeking is false?

Former Alabama Governor George Wallace ran for president several times, once as a third-party candidate in 1968.Wallace claimed there was "not a dime's worth of difference" between the Democratic and Republican parties during one of his campaigns.How does Wallace's comment relate to the median voter theorem?

The Arrow impossibility theorem

What does a Lorenz curve illustrate?

In the United States, taxpayers are allowed to exclude from taxation a certain amount of income, called

Employees ________ income tax on their wages and salaries, and ________ income tax on the amount employers spend providing them with health insurance.

The proposition that the outcome of a majority vote is likely to represent the preferences of the voter who is in the political middle is called

One important difference between the political process and the market process is that

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

Figure 18-5 Figure 18-5 shows the Lorenz curve for a hypothetical country. -Refer to Figure 18-5.The middle 20 percent of households

The government of Silverado raises revenue through a general income tax paid by all its residents to operate the city's marina.The marina is used by private boat owners.This method of raising revenue to operate the marina is