Question 1

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

Accepted Answer

The poverty line is the level of annual

Question 2

The Gini coefficient for the United States in 1980 was 0.403.In 2011,the coefficient was equal to 0.477.This means that

Accepted Answer

A)  per capita income in the United States rose from 1980 to 2011. 
B)  there was a decrease in the amount of government transfer payments from 1980 to 2011. 
C)  cuts in federal income tax rates in the early 1980s and 2001 helped to reduce income inequality. 
D)  income inequality increased from 1980 to 2011. 
A)  per capita income in the United States rose from 1980 to 2011. 
B)  there was a decrease in the amount of government transfer payments from 1980 to 2011. 
C)  cuts in federal income tax rates in the early 1980s and 2001 helped to reduce income inequality. 
D)  income inequality increased from 1980 to 2011.

Question 3

The median voter theorem states that the outcome of a majority vote

Accepted Answer

A)  tends to favor the preferences of high income individuals and ignore the median voter. 
B)  is likely to represent the preferences of society's middle-income voter. 
C)  is likely to represent the preferences of the voter who is in the political middle. 
D)  is determined by the average consumer and producer in an economy. 
A)  tends to favor the preferences of high income individuals and ignore the median voter. 
B)  is likely to represent the preferences of society's middle-income voter. 
C)  is likely to represent the preferences of the voter who is in the political middle. 
D)  is determined by the average consumer and producer in an economy.

Question 4

A marginal tax rate is

Accepted Answer

A)  the fraction of income that must be paid in taxes. 
B)  the fraction of each additional dollar of income that must be paid in taxes. 
C)  the incremental income one must earn to offset each additional dollar of tax. 
D)  the ratio of a change in income to a change in taxes paid. 
A)  the fraction of income that must be paid in taxes. 
B)  the fraction of each additional dollar of income that must be paid in taxes. 
C)  the incremental income one must earn to offset each additional dollar of tax. 
D)  the ratio of a change in income to a change in taxes paid.

Question 5

A situation where a member of Congress votes to approve a bill in exchange for favorable votes from other members on other bills is called

Accepted Answer

A)  rent seeking. 
B)  logrolling. 
C)  regulatory capture. 
D)  special interest legislation. 
A)  rent seeking. 
B)  logrolling. 
C)  regulatory capture. 
D)  special interest legislation.

Question 6

Consider the following methods of taxing a corporation's income: 
a.A flat tax,as opposed to a progressive tax,is levied on corporate profits.
b.A system whereby a corporation calculates its annual profit and notifies each shareholder of her portion of the profits.The shareholder would then be required to include this amount as taxable income for her personal income tax.The corporation does not pay a tax.
c.A system where the federal government continues to tax corporate income through the corporate income tax but allows individual taxpayers to receive,tax free,corporate dividends and capital gains.
Which of the methods above would avoid double taxation?

Accepted Answer

A)  a, b, and c 
B)  a and b only 
C)  a and c only 
D)  b and c only 
A)  a, b, and c 
B)  a and b only 
C)  a and c only 
D)  b and c only

Question 7

When considering changes in tax policy,economists usually focus on

Accepted Answer

A)  the average tax rate. 
B)  the marginal tax rate. 
C)  people's willingness to pay taxes. 
D)  people's ability to pay taxes. 
A)  the average tax rate. 
B)  the marginal tax rate. 
C)  people's willingness to pay taxes. 
D)  people's ability to pay taxes.

Question 8

Exempting food purchases from sales tax is consistent with the ability-to-pay principle,although not necessarily consistent with vertical equity.

Accepted Answer

A) True 
 B)False

Question 9

Measures of poverty (for example,the poverty line)and the distribution of income (for example,the Lorenz curve and the Gini coefficient)are misleading for which of the following two reasons?

Accepted Answer

A)  First, these measures do not take into account income mobility over time. Second, these measures ignore the effects of government programs meant to reduce poverty. 
B)  First, none of these measures are adjusted for inflation. Second, they do not measure income on a per capita basis. 
C)  First, these measures fail to include the income U.S. citizens earn working for foreign firms that have operations located in the United States. Second, these measures fail to include income foreign citizens earn working for U.S. firms that have operations in foreign countries. 
D)  First, these measures fail to include dividend and interest income earned on stocks and bonds. Second, these measures fail to include the value of goods and services citizens make for their own consumption that are not sold in markets. 
A)  First, these measures do not take into account income mobility over time. Second, these measures ignore the effects of government programs meant to reduce poverty. 
B)  First, none of these measures are adjusted for inflation. Second, they do not measure income on a per capita basis. 
C)  First, these measures fail to include the income U.S. citizens earn working for foreign firms that have operations located in the United States. Second, these measures fail to include income foreign citizens earn working for U.S. firms that have operations in foreign countries. 
D)  First, these measures fail to include dividend and interest income earned on stocks and bonds. Second, these measures fail to include the value of goods and services citizens make for their own consumption that are not sold in markets.

Question 10

Explain why it is more difficult to determine the incidence of the corporate income tax than it is to determine the incidence of the tax on gasoline.

Accepted Answer

You can determine the incidence of the g

Question 11

One argument advanced in favor of not increasing the income tax on individuals with high income is that

Accepted Answer

A)  increasing income tax increases wealth which contributes to increases in GDP. 
B)  increasing the income tax on these individuals will reduce economic efficiency. 
C)  increasing the income tax affects mostly middle-income and low-income individuals who are already paying heavy income taxes. 
D)  not increasing income taxes will discourage corporations from increasing investment. 
A)  increasing income tax increases wealth which contributes to increases in GDP. 
B)  increasing the income tax on these individuals will reduce economic efficiency. 
C)  increasing the income tax affects mostly middle-income and low-income individuals who are already paying heavy income taxes. 
D)  not increasing income taxes will discourage corporations from increasing investment.

Question 12

Define logrolling.Explain why logrolling often results in legislation that benefits the economic interests of a few,while harming the interests of a larger group of people.

Accepted Answer

Logrolling refers to the situation where

Question 13

When the demand for a product is less elastic than the supply

Accepted Answer

A)  consumers pay the majority of the tax on the product. 
B)  firms pay the majority of the tax on the product. 
C)  firms pay the entire tax on the product. 
D)  consumers pay the entire tax on the product. 
A)  consumers pay the majority of the tax on the product. 
B)  firms pay the majority of the tax on the product. 
C)  firms pay the entire tax on the product. 
D)  consumers pay the entire tax on the product.

Question 14

Which of the following is the source of revenue for Medicare and Social Security in the United States?

Accepted Answer

A)  individual income taxes 
B)  sales taxes 
C)  social insurance taxes 
D)  property taxes 
A)  individual income taxes 
B)  sales taxes 
C)  social insurance taxes 
D)  property taxes

Question 15

What does a Lorenz curve illustrate?

Accepted Answer

A)  a comparison of the distribution of income in two different countries 
B)  the distribution of income within a country in a given time period 
C)  the share of taxes paid by different groups of households 
D)  the change over time in the percentage of households with incomes that place them below the poverty line 
A)  a comparison of the distribution of income in two different countries 
B)  the distribution of income within a country in a given time period 
C)  the share of taxes paid by different groups of households 
D)  the change over time in the percentage of households with incomes that place them below the poverty line

Question 16

If voters lack an economic incentive to become informed about pending legislation,then their preferences become a constraint on legislators voting for rent-seeking legislation.

Accepted Answer

A) True 
 B)False

Question 17

Rapid economic growth tends to increase the degree of income mobility.

Accepted Answer

A) True 
 B)False

Question 18

In 2012,which type of tax raised the most revenue for the U.S.federal government? Which type of tax raised the most revenue for state and local governments?

Accepted Answer

In 2012,individual income taxe

Question 19

Many economists believe that when the federal government establishes an agency to regulate a particular industry,the regulated firms try to influence the agency even if these actions do not benefit the public.Economists refer to this result of government regulation by which of the following terms?

Accepted Answer

A)  regulatory capture 
B)  logrolling 
C)  special interest regulation 
D)  the regulatory paradox 
A)  regulatory capture 
B)  logrolling 
C)  special interest regulation 
D)  the regulatory paradox

Question 20

If your income is $92,000 and you pay taxes of $19,475,what is your average tax rate? Show your work.

Accepted Answer

Average tax rate = $

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

The Gini coefficient for the United States in 1980 was 0.403.In 2011,the coefficient was equal to 0.477.This means that

The median voter theorem states that the outcome of a majority vote

A marginal tax rate is

A situation where a member of Congress votes to approve a bill in exchange for favorable votes from other members on other bills is called

When considering changes in tax policy,economists usually focus on

Exempting food purchases from sales tax is consistent with the ability-to-pay principle,although not necessarily consistent with vertical equity.

Measures of poverty (for example,the poverty line)and the distribution of income (for example,the Lorenz curve and the Gini coefficient)are misleading for which of the following two reasons?

Explain why it is more difficult to determine the incidence of the corporate income tax than it is to determine the incidence of the tax on gasoline.

One argument advanced in favor of not increasing the income tax on individuals with high income is that

Define logrolling.Explain why logrolling often results in legislation that benefits the economic interests of a few,while harming the interests of a larger group of people.

When the demand for a product is less elastic than the supply

Which of the following is the source of revenue for Medicare and Social Security in the United States?

What does a Lorenz curve illustrate?

If voters lack an economic incentive to become informed about pending legislation,then their preferences become a constraint on legislators voting for rent-seeking legislation.

Rapid economic growth tends to increase the degree of income mobility.

In 2012,which type of tax raised the most revenue for the U.S.federal government? Which type of tax raised the most revenue for state and local governments?

Many economists believe that when the federal government establishes an agency to regulate a particular industry,the regulated firms try to influence the agency even if these actions do not benefit the public.Economists refer to this result of government regulation by which of the following terms?

If your income is $92,000 and you pay taxes of $19,475,what is your average tax rate? Show your work.

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 More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Filters

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

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

The Gini coefficient for the United States in 1980 was 0.403.In 2011,the coefficient was equal to 0.477.This means that

The median voter theorem states that the outcome of a majority vote

A marginal tax rate is

A situation where a member of Congress votes to approve a bill in exchange for favorable votes from other members on other bills is called

When considering changes in tax policy,economists usually focus on

Exempting food purchases from sales tax is consistent with the ability-to-pay principle,although not necessarily consistent with vertical equity.

Measures of poverty (for example,the poverty line)and the distribution of income (for example,the Lorenz curve and the Gini coefficient)are misleading for which of the following two reasons?

Explain why it is more difficult to determine the incidence of the corporate income tax than it is to determine the incidence of the tax on gasoline.

One argument advanced in favor of not increasing the income tax on individuals with high income is that

Define logrolling.Explain why logrolling often results in legislation that benefits the economic interests of a few,while harming the interests of a larger group of people.

When the demand for a product is less elastic than the supply

Which of the following is the source of revenue for Medicare and Social Security in the United States?

What does a Lorenz curve illustrate?

If voters lack an economic incentive to become informed about pending legislation,then their preferences become a constraint on legislators voting for rent-seeking legislation.

Rapid economic growth tends to increase the degree of income mobility.

In 2012,which type of tax raised the most revenue for the U.S.federal government? Which type of tax raised the most revenue for state and local governments?

Many economists believe that when the federal government establishes an agency to regulate a particular industry,the regulated firms try to influence the agency even if these actions do not benefit the public.Economists refer to this result of government regulation by which of the following terms?

If your income is $92,000 and you pay taxes of $19,475,what is your average tax rate? Show your work.

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 More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Filters