Question 1

The ability-to-pay principle suggests that the amount of tax a person pays should be greater the greater is a person's income.

Accepted Answer

A) True 
 B)False

Question 2

A public good is one for which:

Accepted Answer

A)  consumers who don't pay for the good can be excluded from its use. 
B)  the marginal cost of adding another consumer is zero. 
C)  the good is divisible and measurable. 
D)  there are no external costs. 
A)  consumers who don't pay for the good can be excluded from its use. 
B)  the marginal cost of adding another consumer is zero. 
C)  the good is divisible and measurable. 
D)  there are no external costs.

Question 3

The vice president of an advertising agency is too busy with an upcoming multi-million-dollar, multimedia margarine campaign to vote in the upcoming tax assessor election.This is an example of:

Accepted Answer

A)  the median voter principle. 
B)  rational abstention. 
C)  rational ignorance. 
D)  rent seeking. 
A)  the median voter principle. 
B)  rational abstention. 
C)  rational ignorance. 
D)  rent seeking.

Question 4

The evidence in the U.S.economy suggests that, taken collectively, taxes in the economy are:

Accepted Answer

A)  extremely regressive. 
B)  extremely progressive. 
C)  slightly progressive. 
D)  proportional. 
A)  extremely regressive. 
B)  extremely progressive. 
C)  slightly progressive. 
D)  proportional.

Question 5

Although the sales tax is levied proportionately, its incidence turns out to be regressive.

Accepted Answer

A) True 
 B)False

Question 6

The two largest sources of U.S.government revenue are:

Accepted Answer

A)  user fees and sales taxes. 
B)  property taxes and user fees. 
C)  payroll taxes and individual income taxes. 
D)  death taxes and gift taxes. 
A)  user fees and sales taxes. 
B)  property taxes and user fees. 
C)  payroll taxes and individual income taxes. 
D)  death taxes and gift taxes.

Question 7

Deciding whether the ultimate burden of a tax lies on workers, consumers, or firms is called:

Accepted Answer

A)  public interest theory. 
B)  rational choice theory. 
C)  tax incidence analysis. 
D)  budget analysis. 
A)  public interest theory. 
B)  rational choice theory. 
C)  tax incidence analysis. 
D)  budget analysis.

Question 8

When a government agency buys a good or service, it is called:

Accepted Answer

A)  a government purchase. 
B)  a transfer payment. 
C)  government input. 
D)  taxing. 
A)  a government purchase. 
B)  a transfer payment. 
C)  government input. 
D)  taxing.

Question 9

The largest transfer payment program in the United States is:

Accepted Answer

A)  Social Security payments to retired persons. 
B)  Medicare. 
C)  Medicaid. 
D)  Veterans benefits. 
A)  Social Security payments to retired persons. 
B)  Medicare. 
C)  Medicaid. 
D)  Veterans benefits.

Question 10

All spending by government agencies is called government purchases.

Accepted Answer

A) True 
 B)False

Question 11

When an action by one agent harms another outside of any market exchange, there is a(n):

Accepted Answer

A)  public choice. 
B)  tax incidence. 
C)  transfer payment. 
D)  external cost. 
A)  public choice. 
B)  tax incidence. 
C)  transfer payment. 
D)  external cost.

Question 12

A transfer payment for which income is not a qualifying factor is:

Accepted Answer

A)  externality tested. 
B)  nonexternality tested. 
C)  means-tested. 
D)  non-means-tested. 
A)  externality tested. 
B)  nonexternality tested. 
C)  means-tested. 
D)  non-means-tested.

Question 13

Since the 1960s, total government expenditures generally have:

Accepted Answer

A)  been less than total government receipts. 
B)  been equal to total government receipts. 
C)  increased more slowly than government purchases. 
D)  increased more rapidly than government purchases. 
A)  been less than total government receipts. 
B)  been equal to total government receipts. 
C)  increased more slowly than government purchases. 
D)  increased more rapidly than government purchases.

Question 14

Use the following to answer question(s): Correcting for Market Failure: A Public Good
  
-(Exhibit: Correcting for Market Failure: A Public Good) A private market produces R units of output of a public good.By imposing taxes to finance the public good, the government could move the production from R to the efficient level of production of:

Accepted Answer

A)  Q. 
B)  U. 
C)  W. 
D)  X. 
A)  Q. 
B)  U. 
C)  W. 
D)  X.

Question 15

If the marginal benefit received from a good is equal to the marginal opportunity cost of production, then:

Accepted Answer

A)  society's well-being can be improved if production increases. 
B)  society's well-being can be improved if production decreases. 
C)  the market is producing too much of the good. 
D)  the market is producing an efficient quantity. 
A)  society's well-being can be improved if production increases. 
B)  society's well-being can be improved if production decreases. 
C)  the market is producing too much of the good. 
D)  the market is producing an efficient quantity.

Question 16

Paying a tax of $10 on an income of $100, a tax of $25 on an income of $200, and a tax of $60 on an income of $300 is an example of a(n):

Accepted Answer

A)  progressive tax. 
B)  proportional tax. 
C)  regressive tax. 
D)  constant-rate tax. 
A)  progressive tax. 
B)  proportional tax. 
C)  regressive tax. 
D)  constant-rate tax.

Question 17

Compare and contrast each of the following pairs of economic terms:
a.Ability-to-pay principle versus benefits-received principle
b.Merit and demerit goods
c.Government purchases versus government expenditures
d.Means-tested and non-means-tested transfer payments
e.Progressive tax versus regressive tax
f.Public choice theory and public interest theory analyses of choices in the public sector

Accepted Answer

a. The ability-to-pay principle and the

Question 18

Use the following to answer question(s): Correcting for Market Failure: Imperfect Competition
  
-(Exhibit: Correcting for Market Failure: Imperfect Competition) If the government intervenes to induce the imperfectly competitive firm shown in this exhibit to produce at the efficient level of output of ________ , the change in output would be _______ .

Accepted Answer

A)  W; RW 
B)  W; WZ 
C)  Z; RZ 
D)  Z; WZ 
A)  W; RW 
B)  W; WZ 
C)  Z; RZ 
D)  Z; WZ

Question 19

Suppose that in the production of peanut butter, Peanuts 'R' Us discards broken peanut shells onto an adjacent recreational area.This will most likely lead to the market failure of:

Accepted Answer

A)  external cost. 
B)  deregulation. 
C)  imperfect information. 
D)  special interest groups. 
A)  external cost. 
B)  deregulation. 
C)  imperfect information. 
D)  special interest groups.

Question 20

According to the text, the growing power of special-interest groups has led to:

Accepted Answer

A)  proposals for the imposition of term limits. 
B)  the progressive income tax. 
C)  a proposal that campaigns for Congress be funded by local governments. 
D)  demands for higher poll taxes. 
A)  proposals for the imposition of term limits. 
B)  the progressive income tax. 
C)  a proposal that campaigns for Congress be funded by local governments. 
D)  demands for higher poll taxes.

The ability-to-pay principle suggests that the amount of tax a person pays should be greater the greater is a person's income.

A public good is one for which:

The vice president of an advertising agency is too busy with an upcoming multi-million-dollar, multimedia margarine campaign to vote in the upcoming tax assessor election.This is an example of:

The evidence in the U.S.economy suggests that, taken collectively, taxes in the economy are:

Although the sales tax is levied proportionately, its incidence turns out to be regressive.

The two largest sources of U.S.government revenue are:

Deciding whether the ultimate burden of a tax lies on workers, consumers, or firms is called:

When a government agency buys a good or service, it is called:

The largest transfer payment program in the United States is:

All spending by government agencies is called government purchases.

When an action by one agent harms another outside of any market exchange, there is a(n):

A transfer payment for which income is not a qualifying factor is:

Since the 1960s, total government expenditures generally have:

If the marginal benefit received from a good is equal to the marginal opportunity cost of production, then:

Paying a tax of $10 on an income of $100, a tax of $25 on an income of $200, and a tax of $60 on an income of $300 is an example of a(n):

Suppose that in the production of peanut butter, Peanuts 'R' Us discards broken peanut shells onto an adjacent recreational area.This will most likely lead to the market failure of:

According to the text, the growing power of special-interest groups has led to:

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 15: Public Finance and Public Choice

The ability-to-pay principle suggests that the amount of tax a person pays should be greater the greater is a person's income.

A public good is one for which:

The vice president of an advertising agency is too busy with an upcoming multi-million-dollar, multimedia margarine campaign to vote in the upcoming tax assessor election.This is an example of:

The evidence in the U.S.economy suggests that, taken collectively, taxes in the economy are:

Although the sales tax is levied proportionately, its incidence turns out to be regressive.

The two largest sources of U.S.government revenue are:

Deciding whether the ultimate burden of a tax lies on workers, consumers, or firms is called:

When a government agency buys a good or service, it is called:

The largest transfer payment program in the United States is:

All spending by government agencies is called government purchases.

When an action by one agent harms another outside of any market exchange, there is a(n):

A transfer payment for which income is not a qualifying factor is:

Since the 1960s, total government expenditures generally have:

If the marginal benefit received from a good is equal to the marginal opportunity cost of production, then:

Paying a tax of $10 on an income of $100, a tax of $25 on an income of $200, and a tax of $60 on an income of $300 is an example of a(n):

Suppose that in the production of peanut butter, Peanuts 'R' Us discards broken peanut shells onto an adjacent recreational area.This will most likely lead to the market failure of:

According to the text, the growing power of special-interest groups has led to:

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters