Question 1

The total burden of a tax equals tax collections minus excess burdens.

Accepted Answer

A) True 
 B)False

Question 2

Explain why some argue that income tax loopholes primarily benefit the rich.

Accepted Answer

Since the personal income tax is progres

Question 3

Homeowners

Accepted Answer

A) are subject to double taxation. 
B) benefit from several loopholes. 
C) have no particular advantages in the tax system. 
D) must pay tax on the "income" of living in a house. 
A) are subject to double taxation. 
B) benefit from several loopholes. 
C) have no particular advantages in the tax system. 
D) must pay tax on the "income" of living in a house.

Question 4

If the demand curve for a product is vertical,then

Accepted Answer

A) consumers will refuse to bear any share of tax burden. 
B) producers will bear the larger share of the tax burden. 
C) consumers will bear the entire tax burden. 
D) producers and consumers will equally share the tax burden. 
A) consumers will refuse to bear any share of tax burden. 
B) producers will bear the larger share of the tax burden. 
C) consumers will bear the entire tax burden. 
D) producers and consumers will equally share the tax burden.

Question 5

Figure 18-2
  
-Figure 18-2 shows the widget market before and after an excise tax is imposed.The tax per widget equals ____.

Accepted Answer

A) $5 
B) $20 
C) $25 
D) $30 
A) $5 
B) $20 
C) $25 
D) $30

Question 6

What is the flypaper theory of tax incidence? This theory is typically wrong.Why?

Accepted Answer

This is an axiom which maintains that th

Question 7

Americans generally pay

Accepted Answer

A) a lower percentage of their incomes in taxes than citizens of other industrialized countries. 
B) a lower percentage of their incomes in taxes than citizens of other industrialized countries, with the exceptions of Sweden and the Netherlands. 
C) about the same percentage of their incomes in taxes as citizens of other industrialized countries. 
D) a higher percentage of their incomes in taxes than citizens of other industrialized countries. 
A) a lower percentage of their incomes in taxes than citizens of other industrialized countries. 
B) a lower percentage of their incomes in taxes than citizens of other industrialized countries, with the exceptions of Sweden and the Netherlands. 
C) about the same percentage of their incomes in taxes as citizens of other industrialized countries. 
D) a higher percentage of their incomes in taxes than citizens of other industrialized countries.

Question 8

The share of GDP taken by taxes is considerably higher in the United States than in other countries.

Accepted Answer

A) True 
 B)False

Question 9

Most loopholes in the income tax system

Accepted Answer

A) are more likely to be exploited by the wealthy. 
B) make it more progressive. 
C) were created by the tax reforms instituted in 1986. 
D) do not affect the economic decisions of the people who benefit from them. 
A) are more likely to be exploited by the wealthy. 
B) make it more progressive. 
C) were created by the tax reforms instituted in 1986. 
D) do not affect the economic decisions of the people who benefit from them.

Question 10

A progressive tax is one for which the percentage of each added dollar of income paid in taxes

Accepted Answer

A) increases as income increases. 
B) remains the same as income increases. 
C) decreases as income increases. 
D) is zero after a certain maximum income is reached. 
A) increases as income increases. 
B) remains the same as income increases. 
C) decreases as income increases. 
D) is zero after a certain maximum income is reached.

Question 11

The Bush tax cuts concentrated on reducing ____ tax rates which means they can be expected to improve economic ____.

Accepted Answer

A) marginal; efficiency 
B) marginal; equity 
C) average; efficiency 
D) average; equity 
A) marginal; efficiency 
B) marginal; equity 
C) average; efficiency 
D) average; equity

Question 12

Revenue sharing is usually a means of

Accepted Answer

A) making states transfer money to the federal government. 
B) equalizing expenditures per pupil made by school districts. 
C) splitting the revenue earned from excise taxes between states and the federal government. 
D) making grants to state and local governments. 
A) making states transfer money to the federal government. 
B) equalizing expenditures per pupil made by school districts. 
C) splitting the revenue earned from excise taxes between states and the federal government. 
D) making grants to state and local governments.

Question 13

Sales taxes,property taxes,and value-added taxes are examples of indirect taxes.

Accepted Answer

A) True 
 B)False

Question 14

The federal government receives most of its revenue from three sources: personal income tax,corporate income tax,and payroll tax.

Accepted Answer

A) True 
 B)False

Question 15

If a tax is regressive,the average tax rate

Accepted Answer

A) remains the same as income rises. 
B) rises as income rises. 
C) falls as income rises. 
D) falls as income falls. 
A) remains the same as income rises. 
B) rises as income rises. 
C) falls as income rises. 
D) falls as income falls.

Question 16

Explain whether or not the ability-to-pay principle of tax equity is consistent with the benefits received principle of taxation.

Accepted Answer

Ability-to-pay assesses a higher tax on

Question 17

The method of financing the Social Security system until 1983 is best described as

Accepted Answer

A) trust fund. 
B) excise tax. 
C) indirect tax. 
D) "pay as you go." 
A) trust fund. 
B) excise tax. 
C) indirect tax. 
D) "pay as you go."

Question 18

The corporate tax applies to firms' total revenues.

Accepted Answer

A) True 
 B)False

Question 19

What are the arguments for and against federal government grants to states?

Accepted Answer

Supporters of large grants see state gov

Question 20

Existing loopholes erode the progressivity of the U.S.tax system.

Accepted Answer

A) True 
 B)False

Exam 18: Taxation and Resource Allocation

The total burden of a tax equals tax collections minus excess burdens.

Explain why some argue that income tax loopholes primarily benefit the rich.

Homeowners

If the demand curve for a product is vertical,then

Figure 18-2 -Figure 18-2 shows the widget market before and after an excise tax is imposed.The tax per widget equals ____.

What is the flypaper theory of tax incidence? This theory is typically wrong.Why?

Americans generally pay

The share of GDP taken by taxes is considerably higher in the United States than in other countries.

Most loopholes in the income tax system

A progressive tax is one for which the percentage of each added dollar of income paid in taxes

The Bush tax cuts concentrated on reducing ____ tax rates which means they can be expected to improve economic ____.

Revenue sharing is usually a means of

Sales taxes,property taxes,and value-added taxes are examples of indirect taxes.

The federal government receives most of its revenue from three sources: personal income tax,corporate income tax,and payroll tax.

If a tax is regressive,the average tax rate

Explain whether or not the ability-to-pay principle of tax equity is consistent with the benefits received principle of taxation.

The method of financing the Social Security system until 1983 is best described as

The corporate tax applies to firms' total revenues.

What are the arguments for and against federal government grants to states?

Existing loopholes erode the progressivity of the U.S.tax system.

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production,Inputs,and Cost: Building Blocks for Supply Analysis

Output,Price,and Profit: The Importance of Marginal Analysis

Securities: Business Finance,and the Economy: The Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: the Price System

The Shortcomings of Free Markets

The Markets Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Filters

The Bush tax cuts concentrated on reducing tax rates which means they can be expected to improve economic .