Question 1

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. C

Question 2

Figure 16-2   Figure 16-2 shows a demand curve and two sets of supply curves,one set more elastic than the other.
-Refer to Figure 16-2.If the government imposes an excise tax of $1.00 on every unit sold,the producer's burden of the tax

Accepted Answer

A) is greater under the more elastic supply curve S0. 
B) is greater under the less elastic supply curve S0. 
C) is greater under the less elastic supply curve S1. 
D) is the same under either supply curve because there is a single demand curve that captures buyers' market behaviour. 
A) is greater under the more elastic supply curve S0. 
B) is greater under the less elastic supply curve S0. 
C) is greater under the less elastic supply curve S1. 
D) is the same under either supply curve because there is a single demand curve that captures buyers' market behaviour. C

Question 3

What is a Lorenz curve and what is a Gini coefficient?

Accepted Answer

A Lorenz curve is a curve that shows the distribution of income by arraying incomes from the lowest to the highest on the horizontal axis and indicating the cumulative fraction of income earned by each fraction of households on the vertical axis.A Gini coefficient is equal to the area between the line of perfect income equality and the Lorenz curve divided by the whole area below the line of perfect equality.

Question 4

What is the difference between the poverty line and the poverty rate?

Accepted Answer

The poverty line is the level of annual

Question 5

A personal exemption refers to

Accepted Answer

A) the tax rate that applies to a particular tax bracket. 
B) the tax bracket that represents basic living expenses. 
C) an amount representing basic living expenses that can be subtracted from income. 
D) a dispensation that allows certain qualifying individuals not to pay federal taxes. 
A) the tax rate that applies to a particular tax bracket. 
B) the tax bracket that represents basic living expenses. 
C) an amount representing basic living expenses that can be subtracted from income. 
D) a dispensation that allows certain qualifying individuals not to pay federal taxes.

Question 6

The 'ability-to-pay' principle of taxation is the normative idea that

Accepted Answer

A) an equitable tax system is one in which high income individuals should bear a greater burden of taxes than low income individuals. 
B) each individual should voluntarily contribute according to her ability to pay taxes. 
C) progressive taxes are more equitable than regressive taxes. 
D) two individuals earning the same income should have equal ability to pay,all else constant. 
A) an equitable tax system is one in which high income individuals should bear a greater burden of taxes than low income individuals. 
B) each individual should voluntarily contribute according to her ability to pay taxes. 
C) progressive taxes are more equitable than regressive taxes. 
D) two individuals earning the same income should have equal ability to pay,all else constant.

Question 7

Figure 16-5   Figure 16-5 shows the Lorenz curve for a hypothetical country.
-Refer to Figure 16-5.The highest 20 per cent of households

Accepted Answer

A) earn 24 per cent of the society's total income. 
B) earn 28 per cent of the society's total income. 
C) earn 42 per cent of the society's total income. 
D) earn 72 per cent of the society's total income. 
A) earn 24 per cent of the society's total income. 
B) earn 28 per cent of the society's total income. 
C) earn 42 per cent of the society's total income. 
D) earn 72 per cent of the society's total income.

Question 8

What is meant by 'tax incidence'?

Accepted Answer

Tax incidence refers to the ac

Question 9

If the government is most interested in minimising excess burden of an excise tax,should it impose the tax on goods that are elastic or on goods that are inelastic?

Accepted Answer

If the government wants to min

Question 10

The average tax rate is calculated as

Accepted Answer

A) total income divided by the total tax paid. 
B) the change in total tax paid divided by the change in income. 
C) total tax paid divided by total income. 
D) the change in income divided by the change in total tax paid. 
A) total income divided by the total tax paid. 
B) the change in total tax paid divided by the change in income. 
C) total tax paid divided by total income. 
D) the change in income divided by the change in total tax paid.

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

Figure 16-1  
-Refer to Figure 16-1.The sales tax revenue collected by the government is represented by the area

Accepted Answer

A) B + C. 
B) F + G. 
C) E + H. 
D) B + C + F + G. 
A) B + C. 
B) F + G. 
C) E + H. 
D) B + C + F + G.

Question 13

Which of the following is not one of the concerns of some policymakers and economists that the increase in the share of income earned by the 1 per cent is damaging to the country?

Accepted Answer

A) The higher incomes of the 1 per cent may give them disproportionate political influence through campaign contributions. 
B) Countries with high levels of income inequality have lower growth rates than do countries with more equal distributions of income. 
C) Further increases in marginal tax rates may reduce work,saving,and investment,thereby reducing economic growth. 
D) Rising income inequality can lead to political unrest. 
A) The higher incomes of the 1 per cent may give them disproportionate political influence through campaign contributions. 
B) Countries with high levels of income inequality have lower growth rates than do countries with more equal distributions of income. 
C) Further increases in marginal tax rates may reduce work,saving,and investment,thereby reducing economic growth. 
D) Rising income inequality can lead to political unrest.

Question 14

Which of the following tax systems would help reduce income inequality the most?

Accepted Answer

A) a regressive tax system 
B) a proportional tax system 
C) a progressive tax system 
D) a consumption tax system 
A) a regressive tax system 
B) a proportional tax system 
C) a progressive tax system 
D) a consumption tax system

Question 15

The actual division of the burden of a tax is called

Accepted Answer

A) tax credit. 
B) tax incidence. 
C) excess burden. 
D) tax dispersion. 
A) tax credit. 
B) tax incidence. 
C) excess burden. 
D) tax dispersion.

Question 16

The idea that two taxpayers in the same economic circumstances should pay the same level of taxes is known as the

Accepted Answer

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

Question 17

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

Accepted Answer

A) consistent with the benefits-received principle. 
B) consistent with the ability-to-pay principle. 
C) inconsistent with the benefits-received principle. 
D) inconsistent with the ability-to-pay principle. 
A) consistent with the benefits-received principle. 
B) consistent with the ability-to-pay principle. 
C) inconsistent with the benefits-received principle. 
D) inconsistent with the ability-to-pay principle.

Question 18

Figure 16-6   Figure 16-6 shows the Lorenz curves for Islandia and Syldavia.
-Refer to Figure 16-6.If area X = 2060,area Y = 240,and area Z = 2700,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

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 20

The term tax incidence refers to

Accepted Answer

A) the degree of progression of a tax. 
B) the actual division of the burden of a tax between buyers and sellers in a market. 
C) the amount of revenue government collects from a tax imposed on a good or service. 
D) whether the burden of a tax rests more heavily on those with higher incomes or those with lower incomes. 
A) the degree of progression of a tax. 
B) the actual division of the burden of a tax between buyers and sellers in a market. 
C) the amount of revenue government collects from a tax imposed on a good or service. 
D) whether the burden of a tax rests more heavily on those with higher incomes or those with lower incomes.

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

Figure 16-2 Figure 16-2 shows a demand curve and two sets of supply curves,one set more elastic than the other. -Refer to Figure 16-2.If the government imposes an excise tax of $1.00 on every unit sold,the producer's burden of the tax

What is a Lorenz curve and what is a Gini coefficient?

What is the difference between the poverty line and the poverty rate?

A personal exemption refers to

The 'ability-to-pay' principle of taxation is the normative idea that

Figure 16-5 Figure 16-5 shows the Lorenz curve for a hypothetical country. -Refer to Figure 16-5.The highest 20 per cent of households

What is meant by 'tax incidence'?

If the government is most interested in minimising excess burden of an excise tax,should it impose the tax on goods that are elastic or on goods that are inelastic?

The average tax rate is calculated as

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

Figure 16-1 -Refer to Figure 16-1.The sales tax revenue collected by the government is represented by the area

Which of the following is not one of the concerns of some policymakers and economists that the increase in the share of income earned by the 1 per cent is damaging to the country?

Which of the following tax systems would help reduce income inequality the most?

The actual division of the burden of a tax is called

The idea that two taxpayers in the same economic circumstances should pay the same level of taxes is known as the

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

Figure 16-6 Figure 16-6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 16-6.If area X = 2060,area Y = 240,and area Z = 2700,calculate the Gini coefficient for Islandia.

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

The term tax incidence refers to

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

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Exam 16: The Distribution of Income and Social Policy

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

Figure 16-2 Figure 16-2 shows a demand curve and two sets of supply curves,one set more elastic than the other. -Refer to Figure 16-2.If the government imposes an excise tax of $1.00 on every unit sold,the producer's burden of the tax

What is a Lorenz curve and what is a Gini coefficient?

What is the difference between the poverty line and the poverty rate?

A personal exemption refers to

The 'ability-to-pay' principle of taxation is the normative idea that

Figure 16-5 Figure 16-5 shows the Lorenz curve for a hypothetical country. -Refer to Figure 16-5.The highest 20 per cent of households

What is meant by 'tax incidence'?

If the government is most interested in minimising excess burden of an excise tax,should it impose the tax on goods that are elastic or on goods that are inelastic?

The average tax rate is calculated as

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

Figure 16-1 -Refer to Figure 16-1.The sales tax revenue collected by the government is represented by the area

Which of the following is not one of the concerns of some policymakers and economists that the increase in the share of income earned by the 1 per cent is damaging to the country?

Which of the following tax systems would help reduce income inequality the most?

The actual division of the burden of a tax is called

The idea that two taxpayers in the same economic circumstances should pay the same level of taxes is known as the

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

Figure 16-6 Figure 16-6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 16-6.If area X = 2060,area Y = 240,and area Z = 2700,calculate the Gini coefficient for Islandia.

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

The term tax incidence refers to

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

Filters