Question 1

The largest single category of expenditures in the federal budget is traditionally

Accepted Answer

A) national defense. 
B) interest on the national debt. 
C) health and public housing programs. 
D) pensions and income security programs. 
A) national defense. 
B) interest on the national debt. 
C) health and public housing programs. 
D) pensions and income security programs.

Question 2

Figure 18-3
  
-In which panel of Figure 18-3 would an excise tax be borne entirely by the supplier?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 3

Taxes on sales of liquor,tobacco,and tires are examples of

Accepted Answer

A) direct taxes. 
B) excise taxes. 
C) progressive taxation. 
D) loopholes. 
A) direct taxes. 
B) excise taxes. 
C) progressive taxation. 
D) loopholes.

Question 4

A proportional tax is one in which the fraction of income paid in taxes rises as a person's income increases.

Accepted Answer

A) True 
 B)False

Question 5

"People who make more money should pay higher taxes" is an example of

Accepted Answer

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

Question 6

Which is the correct order of importance in terms of revenue collected among the following federal taxes?

Accepted Answer

A) (1) corporate income taxes (2) value-added taxes (3) excise taxes 
B) (1) personal income taxes (2) corporate income taxes (3) sales taxes 
C) (1) payroll taxes (2) personal income taxes (3) federal excise taxes 
D) (1) personal income taxes (2) payroll taxes (3) corporate income taxes 
A) (1) corporate income taxes (2) value-added taxes (3) excise taxes 
B) (1) personal income taxes (2) corporate income taxes (3) sales taxes 
C) (1) payroll taxes (2) personal income taxes (3) federal excise taxes 
D) (1) personal income taxes (2) payroll taxes (3) corporate income taxes

Question 7

What were the arguments in favor and against repealing the Bush tax cuts?

Accepted Answer

The arguments against repealing the Bush

Question 8

Which of the following taxes is least likely to be shifted?

Accepted Answer

A) a federal excise tax on grapefruit 
B) a sales tax on some foodstuffs 
C) a personal income tax 
D) a state tax on football tickets 
A) a federal excise tax on grapefruit 
B) a sales tax on some foodstuffs 
C) a personal income tax 
D) a state tax on football tickets

Question 9

In the spring of 1993,President Clinton proposed an energy tax.At one point in the congressional review of the proposal there was discussion of various exemptions for farmers,truckers,etc.One plan was to dye fuel different colors to better track the appropriate tax on the user of the fuel.Economists would label these exemptions

Accepted Answer

A) loopholes. 
B) economically efficient. 
C) obviously fair. 
D) all of the above. 
A) loopholes. 
B) economically efficient. 
C) obviously fair. 
D) all of the above.

Question 10

The authors of the text suggest that a comprehensive personal income tax with few loopholes would be efficient and equitable.What is their reasoning for this statement?

Accepted Answer

They argue that a personal income tax wi

Question 11

Compared to other countries,the U.S.federal government relies

Accepted Answer

A) more heavily on direct taxes than do governments of other countries. 
B) less heavily on direct taxes than do governments of other countries. 
C) more heavily on indirect taxes than do governments of other countries. 
D) on direct taxes about as heavily as do governments of other countries. 
A) more heavily on direct taxes than do governments of other countries. 
B) less heavily on direct taxes than do governments of other countries. 
C) more heavily on indirect taxes than do governments of other countries. 
D) on direct taxes about as heavily as do governments of other countries.

Question 12

In England the Thatcher government substituted a "poll tax" for the local property tax.People took strong exception to the tax,which is basically a head or "lump sum" tax.The principle of taxation such a tax violates is called

Accepted Answer

A) the benefits principle. 
B) the excess burden principle. 
C) the ability-to-pay principle. 
D) the constitutional principle. 
A) the benefits principle. 
B) the excess burden principle. 
C) the ability-to-pay principle. 
D) the constitutional principle.

Question 13

The excess burden of an excise tax is

Accepted Answer

A) greater the more inelastic the supply curve. 
B) greater the more elastic the demand curve. 
C) smaller the more elastic the supply curve. 
D) greater the more inelastic the demand curve. 
A) greater the more inelastic the supply curve. 
B) greater the more elastic the demand curve. 
C) smaller the more elastic the supply curve. 
D) greater the more inelastic the demand curve.

Question 14

State and local governments receive money from sales taxes,property taxes,and the federal government.

Accepted Answer

A) True 
 B)False

Question 15

Indirect taxes are levied on specific economic activities.

Accepted Answer

A) True 
 B)False

Question 16

Taxation may improve the social welfare when the taxed good

Accepted Answer

A) is socially undesirable (like, in some views, liquor and pornography). 
B) imposes negative externalities. 
C) is overproduced under a free-market system. 
D) All of the above are correct. 
A) is socially undesirable (like, in some views, liquor and pornography). 
B) imposes negative externalities. 
C) is overproduced under a free-market system. 
D) All of the above are correct.

Question 17

Under a proportional tax,the fraction of income paid in taxes

Accepted Answer

A) rises as income rises. 
B) is unchanged as income changes. 
C) falls as income rises. 
D) is proportional to the change in income. 
A) rises as income rises. 
B) is unchanged as income changes. 
C) falls as income rises. 
D) is proportional to the change in income.

Question 18

The system of grants from one level of government to another is an example of fiscal federalism.

Accepted Answer

A) True 
 B)False

Question 19

Mrs.Dodge has $8 million in income and pays no income taxes.Her income is most likely

Accepted Answer

A) capital gains. 
B) interest on corporate bonds. 
C) interest on municipal bonds. 
D) offset by mortgage interest. 
A) capital gains. 
B) interest on corporate bonds. 
C) interest on municipal bonds. 
D) offset by mortgage interest.

Question 20

Which of the following taxes is most likely to be shifted?

Accepted Answer

A) a property tax on an owner-occupied residence 
B) a progressive income tax 
C) a flat-rate state income tax 
D) a general sales tax 
A) a property tax on an owner-occupied residence 
B) a progressive income tax 
C) a flat-rate state income tax 
D) a general sales tax

Exam 18: Taxation and Resource Allocation

The largest single category of expenditures in the federal budget is traditionally

Figure 18-3 -In which panel of Figure 18-3 would an excise tax be borne entirely by the supplier?

Taxes on sales of liquor,tobacco,and tires are examples of

A proportional tax is one in which the fraction of income paid in taxes rises as a person's income increases.

"People who make more money should pay higher taxes" is an example of

Which is the correct order of importance in terms of revenue collected among the following federal taxes?

What were the arguments in favor and against repealing the Bush tax cuts?

Which of the following taxes is least likely to be shifted?

The authors of the text suggest that a comprehensive personal income tax with few loopholes would be efficient and equitable.What is their reasoning for this statement?

Compared to other countries,the U.S.federal government relies

In England the Thatcher government substituted a "poll tax" for the local property tax.People took strong exception to the tax,which is basically a head or "lump sum" tax.The principle of taxation such a tax violates is called

The excess burden of an excise tax is

State and local governments receive money from sales taxes,property taxes,and the federal government.

Indirect taxes are levied on specific economic activities.

Taxation may improve the social welfare when the taxed good

Under a proportional tax,the fraction of income paid in taxes

The system of grants from one level of government to another is an example of fiscal federalism.

Mrs.Dodge has $8 million in income and pays no income taxes.Her income is most likely

Which of the following taxes is most likely to be shifted?

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