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

The person or firm that pays a tax bears the burden of the tax.

Accepted Answer

A) True 
 B)False

Question 3

In the United States

Accepted Answer

A) the income tax system has little or no impact on the distribution of income. 
B) the after-tax income distribution of income is more equal than the before-tax distribution. 
C) once a person is in poverty, it is very difficult for a person to get out of poverty. 
D) the degree of income mobility is relatively low. 
A) the income tax system has little or no impact on the distribution of income. 
B) the after-tax income distribution of income is more equal than the before-tax distribution. 
C) once a person is in poverty, it is very difficult for a person to get out of poverty. 
D) the degree of income mobility is relatively low.

Question 4

The government of Silverado raises revenue to operate the city's hospital, open to all residents, through a general income tax paid by its residents.This method of raising revenue is consistent with the benefits-received principle, even if some residents use the hospital more than others.

Accepted Answer

A) True 
 B)False

Question 5

Exemptions and deductions are used

Accepted Answer

A) to add to taxes that must be paid. 
B) by taxpayers to reduce the amount of income subject to tax. 
C) to determine the type of tax structure. 
D) to determine what items are subject to sales taxes. 
A) to add to taxes that must be paid. 
B) by taxpayers to reduce the amount of income subject to tax. 
C) to determine the type of tax structure. 
D) to determine what items are subject to sales taxes.

Question 6

What is the voting paradox?

Accepted Answer

A) the observation that less than 60 percent of those eligible to vote actually vote 
B) the observation that majority voting may not always result in consistent choices 
C) the idea that wealthy corporations are able to sway politicians to act in ways contrary to the desires of the majority 
D) people are aware that their votes will not change the political outcome since these outcomes are predetermined by a group of influential politicians 
A) the observation that less than 60 percent of those eligible to vote actually vote 
B) the observation that majority voting may not always result in consistent choices 
C) the idea that wealthy corporations are able to sway politicians to act in ways contrary to the desires of the majority 
D) people are aware that their votes will not change the political outcome since these outcomes are predetermined by a group of influential politicians

Question 7

According to the benefits-received principle, those who receive the benefits from a government program should pay the taxes that support the program.

Accepted Answer

A) True 
 B)False

Question 8

An income tax system is ________ if marginal tax rates increase as income increases.

Accepted Answer

A) progressive 
B) regressive 
C) efficient 
D) equitable 
A) progressive 
B) regressive 
C) efficient 
D) equitable

Question 9

During the past 30 years, income inequality in the United States has increased in part due to expanding international trade.How does expanding international trade contribute to income inequality?

Accepted Answer

A) It increases the demand for a wide array of products which in turn increases prices beyond the reach of average-income individuals. 
B) It allows producers to exploit workers and reduce the wages they are willing to pay workers. 
C) Domestic firms can now hire low-skilled workers anywhere in the world, putting U.S. workers in competition with foreign workers. This has caused the wages of unskilled workers to be depressed relative to the wages of other workers. 
D) It reduces the cost of producing goods and therefore lowers the value of labor's services. 
A) It increases the demand for a wide array of products which in turn increases prices beyond the reach of average-income individuals. 
B) It allows producers to exploit workers and reduce the wages they are willing to pay workers. 
C) Domestic firms can now hire low-skilled workers anywhere in the world, putting U.S. workers in competition with foreign workers. This has caused the wages of unskilled workers to be depressed relative to the wages of other workers. 
D) It reduces the cost of producing goods and therefore lowers the value of labor's services.

Question 10

The idea that individuals should be taxed in proportion to the marginal benefits that they receive from public goods is called

Accepted Answer

A) the ability-to-pay principle. 
B) the horizontal-equity principle. 
C) the vertical-equity principle. 
D) the benefits-received principle. 
A) the ability-to-pay principle. 
B) the horizontal-equity principle. 
C) the vertical-equity principle. 
D) the benefits-received principle.

Question 11

Horizontal equity means that two people in identical economic situations should pay the same amount of taxes.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements concerning the federal corporate income tax is true?

Accepted Answer

A) It is an efficient tax because it imposes a small excess burden relative to the tax revenue it raises. 
B) The incidence of the corporate income tax can be determined by using demand and supply analysis. 
C) Determining the incidence of the corporate income tax is complicated because it is not certain how corporations respond to the tax. 
D) The corporate income tax is an example of the benefits-received principle. 
A) It is an efficient tax because it imposes a small excess burden relative to the tax revenue it raises. 
B) The incidence of the corporate income tax can be determined by using demand and supply analysis. 
C) Determining the incidence of the corporate income tax is complicated because it is not certain how corporations respond to the tax. 
D) The corporate income tax is an example of the benefits-received principle.

Question 13

The corporate income tax is ultimately paid by all of the following except

Accepted Answer

A) owners of the corporation. 
B) the corporation's debtors in the form of lower rates of return on the corporation's bonds. 
C) customers in the form of higher prices. 
D) employees in the form of lower wages. 
A) owners of the corporation. 
B) the corporation's debtors in the form of lower rates of return on the corporation's bonds. 
C) customers in the form of higher prices. 
D) employees in the form of lower wages.

Question 14

If your income is $40,000 and you pay taxes of $4,650, what is your average tax rate? Show your work.

Accepted Answer

Average tax rate = $

Question 15

Logrolling refers to attempts by individuals to use government action to make themselves better off at the expense of others.

Accepted Answer

A) True 
 B)False

Question 16

The median voter theorem implies that

Accepted Answer

A) many people will be satisfied with the amount of spending on government funded projects. 
B) many people will be dissatisfied with the amount of spending on government funded projects. 
C) people in the political middle will be dissatisfied with the amount of spending on government funded projects. 
D) spending on government funded projects reflects the preferences of only those far away from the median. 
A) many people will be satisfied with the amount of spending on government funded projects. 
B) many people will be dissatisfied with the amount of spending on government funded projects. 
C) people in the political middle will be dissatisfied with the amount of spending on government funded projects. 
D) spending on government funded projects reflects the preferences of only those far away from the median.

Question 17

If, as your taxable income decreases, you pay a smaller 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 18

Figure 18-6
   
Figure 18-6 shows the Lorenz curves for Islandia and Syldavia.
-Refer to Figure 18-6.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 19

How would the elimination of a sales tax affect the market for a product that had been subject to the tax?

Accepted Answer

A) The demand for the product would rise and the equilibrium price would fall by the amount of the tax. 
B) The equilibrium price for the product would fall by less than the amount of the tax. 
C) The reduction in government revenue from the tax would be made up by an increase in property taxes. 
D) The supply of the product would become more elastic. 
A) The demand for the product would rise and the equilibrium price would fall by the amount of the tax. 
B) The equilibrium price for the product would fall by less than the amount of the tax. 
C) The reduction in government revenue from the tax would be made up by an increase in property taxes. 
D) The supply of the product would become more elastic.

Question 20

According to the benefits-received principle of taxation

Accepted Answer

A) individuals who receive the benefits from a government program should pay the taxes that support the program. 
B) because high-income individuals receive the most benefits from government programs, they should pay more taxes than lower-income individuals. 
C) people in the same economic situation should bear an equal share of the tax burden. 
D) the benefits of government programs such as national defense are shared equally by all people; therefore, the burden of paying for these programs should be shared equally. 
A) individuals who receive the benefits from a government program should pay the taxes that support the program. 
B) because high-income individuals receive the most benefits from government programs, they should pay more taxes than lower-income individuals. 
C) people in the same economic situation should bear an equal share of the tax burden. 
D) the benefits of government programs such as national defense are shared equally by all people; therefore, the burden of paying for these programs should be shared equally.

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

The person or firm that pays a tax bears the burden of the tax.

In the United States

The government of Silverado raises revenue to operate the city's hospital, open to all residents, through a general income tax paid by its residents.This method of raising revenue is consistent with the benefits-received principle, even if some residents use the hospital more than others.

Exemptions and deductions are used

What is the voting paradox?

According to the benefits-received principle, those who receive the benefits from a government program should pay the taxes that support the program.

An income tax system is ________ if marginal tax rates increase as income increases.

During the past 30 years, income inequality in the United States has increased in part due to expanding international trade.How does expanding international trade contribute to income inequality?

The idea that individuals should be taxed in proportion to the marginal benefits that they receive from public goods is called

Horizontal equity means that two people in identical economic situations should pay the same amount of taxes.

Which of the following statements concerning the federal corporate income tax is true?

The corporate income tax is ultimately paid by all of the following except

If your income is $40,000 and you pay taxes of $4,650, what is your average tax rate? Show your work.

Logrolling refers to attempts by individuals to use government action to make themselves better off at the expense of others.

The median voter theorem implies that

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

Figure 18-6 Figure 18-6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 18-6.If area X = 2,060, area Y = 240, and area Z = 2,700, calculate the Gini coefficient for Islandia.

How would the elimination of a sales tax affect the market for a product that had been subject to the tax?

According to the benefits-received principle of taxation

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

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

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

The person or firm that pays a tax bears the burden of the tax.

In the United States

The government of Silverado raises revenue to operate the city's hospital, open to all residents, through a general income tax paid by its residents.This method of raising revenue is consistent with the benefits-received principle, even if some residents use the hospital more than others.

Exemptions and deductions are used

What is the voting paradox?

According to the benefits-received principle, those who receive the benefits from a government program should pay the taxes that support the program.

An income tax system is ________ if marginal tax rates increase as income increases.

During the past 30 years, income inequality in the United States has increased in part due to expanding international trade.How does expanding international trade contribute to income inequality?

The idea that individuals should be taxed in proportion to the marginal benefits that they receive from public goods is called

Horizontal equity means that two people in identical economic situations should pay the same amount of taxes.

Which of the following statements concerning the federal corporate income tax is true?

The corporate income tax is ultimately paid by all of the following except

If your income is $40,000 and you pay taxes of $4,650, what is your average tax rate? Show your work.

Logrolling refers to attempts by individuals to use government action to make themselves better off at the expense of others.

The median voter theorem implies that

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

Figure 18-6 Figure 18-6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 18-6.If area X = 2,060, area Y = 240, and area Z = 2,700, calculate the Gini coefficient for Islandia.

How would the elimination of a sales tax affect the market for a product that had been subject to the tax?

According to the benefits-received principle of taxation

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