Question 1

According to projections for 2013 by the Tax Policy Center,the 20 percent of U.S.taxpayers who make the highest incomes

Accepted Answer

A)  use loopholes and tax exemptions to reduce their share of federal income taxes to less than 20 percent. 
B)  pay almost 68 percent of federal income taxes. 
C)  pay about 92 percent of federal income taxes but only about 20 percent of Social Security and Medicare payroll taxes. 
D)  pay more in excise and other taxes than they pay in Social Security and Medicare payroll taxes. 
A)  use loopholes and tax exemptions to reduce their share of federal income taxes to less than 20 percent. 
B)  pay almost 68 percent of federal income taxes. 
C)  pay about 92 percent of federal income taxes but only about 20 percent of Social Security and Medicare payroll taxes. 
D)  pay more in excise and other taxes than they pay in Social Security and Medicare payroll taxes.

Question 2

In the United States,over the past 40 years federal revenues as a share of gross domestic product have

Accepted Answer

A)  risen steadily and now are about 40 percent. 
B)  ranged between 17 and 19 percent. 
C)  fallen below 10 because of rapid economic growth. 
D)  been limited by law to no more than 20 percent. 
A)  risen steadily and now are about 40 percent. 
B)  ranged between 17 and 19 percent. 
C)  fallen below 10 because of rapid economic growth. 
D)  been limited by law to no more than 20 percent.

Question 3

Table 18-3
  
-Refer to Table 18-3.The table above outlines the rankings of three members of the U.S.Senate on three spending alternatives.Assume that Congress can spend additional revenue on only one of the three spending alternatives and that Bart,Lisa,and Maggie,all members of the Senate,participate in a series of votes in which they are to determine which of the spending alternatives should receive funding.Three votes will be taken: (1)Immigration Reform and Unemployment Benefits (2)Immigration Reform and Social Security Reform and (3)Unemployment Benefits and Social Security Reform.
Show the results of each vote and determine whether the voting paradox will occur as a result of these votes.

Accepted Answer

The answer of Table 18-3
  
-Refer to Table 18-3.The...

Question 4

The public choice model raises questions about the government's ability to regulate economic activity efficiently.Which of the following statements represents the views of most economists with regard to the role of government?

Accepted Answer

A)  Congress should abolish the Food and Drug Administration, the Environmental Protection Agency and other agencies and commissions because the costs of their actions exceed the benefits they provide to the public. 
B)  Government should do more to regulate markets. The public choice model has shown that rent seeking and rational ignorance affect more markets than are currently subject to regulation. 
C)  U.S. citizens can afford more government regulation if the cost of this regulation is borne mostly by taxpayers with the highest incomes. 
D)  Agencies such as the Food and Drug Administration and the Environmental Protection Agency can serve a useful purpose, but we need to take the costs of regulation into account along with the benefits. 
A)  Congress should abolish the Food and Drug Administration, the Environmental Protection Agency and other agencies and commissions because the costs of their actions exceed the benefits they provide to the public. 
B)  Government should do more to regulate markets. The public choice model has shown that rent seeking and rational ignorance affect more markets than are currently subject to regulation. 
C)  U.S. citizens can afford more government regulation if the cost of this regulation is borne mostly by taxpayers with the highest incomes. 
D)  Agencies such as the Food and Drug Administration and the Environmental Protection Agency can serve a useful purpose, but we need to take the costs of regulation into account along with the benefits.

Question 5

Economists James Buchanan and Gordon Tullock are well-known for developing

Accepted Answer

A)  the impossibility theorem. 
B)  the voting paradox. 
C)  the public choice model. 
D)  the concept of government failure. 
A)  the impossibility theorem. 
B)  the voting paradox. 
C)  the public choice model. 
D)  the concept of government failure.

Question 6

In the United States,the largest source of funds for public schools is

Accepted Answer

A)  the federal income tax. 
B)  the property tax. 
C)  the consumption tax. 
D)  sales taxes. 
A)  the federal income tax. 
B)  the property tax. 
C)  the consumption tax. 
D)  sales taxes.

Question 7

Studies by the U.S.Census Bureau have shown that

Accepted Answer

A)  families remain below the poverty line for an average of five years. 
B)  there is significant income mobility in the U.S. over time. 
C)  income mobility in the U.S. is minimal. 
D)  over half the people below the poverty line never move out of poverty. 
A)  families remain below the poverty line for an average of five years. 
B)  there is significant income mobility in the U.S. over time. 
C)  income mobility in the U.S. is minimal. 
D)  over half the people below the poverty line never move out of poverty.

Question 8

What is the United States government's formal definition of the poverty line?

Accepted Answer

A)  It is a level of annual income equal to total income in society divided by the population, adjusted for a family of four. 
B)  It is a level of annual income equal to the amount of money necessary to purchase the minimal quantity of food required for adequate nutrition. 
C)  It is the annual income level below which a household is exempt from taxes. 
D)  It is a level of annual income equal to three times the amount of money necessary to purchase the minimal quantity of food required for adequate nutrition. 
A)  It is a level of annual income equal to total income in society divided by the population, adjusted for a family of four. 
B)  It is a level of annual income equal to the amount of money necessary to purchase the minimal quantity of food required for adequate nutrition. 
C)  It is the annual income level below which a household is exempt from taxes. 
D)  It is a level of annual income equal to three times the amount of money necessary to purchase the minimal quantity of food required for adequate nutrition.

Question 9

From 1970 to 2006,the poverty rate in East Asia rose slightly but the level of poverty in sub-Saharan Africa fell dramatically.

Accepted Answer

A) True 
 B)False

Question 10

What are the two types of taxes that working individuals pay on their earnings?

Accepted Answer

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

Question 11

Suppose,on average,a family in Church Falls earning $60,000 per year paid 6 percent of its income in state taxes.A family earning $80,000 paid,on average,$4,760 in state income taxes.Are state taxes in Church Falls progressive or regressive? Be sure to explain the difference between a progressive tax and a regressive tax.

Accepted Answer

A regressive tax is a tax for which peop

Question 12

Figure 18-2   Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold,

Accepted Answer

A)  the deadweight loss is identical under either supply curve. 
B)  the deadweight loss is greater under the supply curve S1. 
C)  the deadweight loss is greater under the supply curve S0. 
D)  there is no deadweight loss since revenue raised is used to fund government projects. 
A)  the deadweight loss is identical under either supply curve. 
B)  the deadweight loss is greater under the supply curve S1. 
C)  the deadweight loss is greater under the supply curve S0. 
D)  there is no deadweight loss since revenue raised is used to fund government projects.

Question 13

The Arrow impossibility theorem explains

Accepted Answer

A)  why there is no system of voting that will consistently represent the underlying preferences of voters. 
B)  why government regulation of private markets will always result in a reduction in economic efficiency in these markets. 
C)  why voters are always rationally ignorant. 
D)  why it is not possible to provide the economically efficient amount of any public good. 
A)  why there is no system of voting that will consistently represent the underlying preferences of voters. 
B)  why government regulation of private markets will always result in a reduction in economic efficiency in these markets. 
C)  why voters are always rationally ignorant. 
D)  why it is not possible to provide the economically efficient amount of any public good.

Question 14

If grocery stores were legally required to charge a 10-cent fee for disposable grocery bags,who would bear the largest burden of this fee?

Accepted Answer

Since consumers need groceries and would

Question 15

Figure 18-1  
-Refer to Figure 18-1.Area B+C+F+G represents

Accepted Answer

A)  the portion of sales tax revenue borne by consumers. 
B)  the portion of sales tax revenue borne by producers. 
C)  the excess burden of the sales tax. 
D)  sales tax revenue collected by the government. 
A)  the portion of sales tax revenue borne by consumers. 
B)  the portion of sales tax revenue borne by producers. 
C)  the excess burden of the sales tax. 
D)  sales tax revenue collected by the government.

Question 16

What is logrolling?

Accepted Answer

A)  a situation where a policymaker votes to approve a bill in exchange for favorable votes from his colleagues on other bills 
B)  a situation where policymakers transfer resources from those voters who are unlikely to have a huge impact on the political outcome to those who contribute to political campaigns 
C)  a situation where a policymaker accepts bribes to prevent proposed legislation from coming to a vote 
D)  a situation where a policymaker gets the government to fund a non-essential project benefiting her family members 
A)  a situation where a policymaker votes to approve a bill in exchange for favorable votes from his colleagues on other bills 
B)  a situation where policymakers transfer resources from those voters who are unlikely to have a huge impact on the political outcome to those who contribute to political campaigns 
C)  a situation where a policymaker accepts bribes to prevent proposed legislation from coming to a vote 
D)  a situation where a policymaker gets the government to fund a non-essential project benefiting her family members

Question 17

At the state and local levels in the United States,the largest source of tax revenue is

Accepted Answer

A)  individual income taxes. 
B)  property tax on real estate. 
C)  sales tax. 
D)  grants from the federal government. 
A)  individual income taxes. 
B)  property tax on real estate. 
C)  sales tax. 
D)  grants from the federal government.

Question 18

Figure 18-2   Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 18-2.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 Pa - Pd under either supply curve. 
B)  is Pb - Pe under either supply curve. 
C)  is Pa - Pd if the supply curve is S0 and Pb - Pe if the supply curve is S1. 
D)  is Pc - Pd if the supply curve is S0 and Pc - Pe if the supply curve is S1. 
A)  is Pa - Pd under either supply curve. 
B)  is Pb - Pe under either supply curve. 
C)  is Pa - Pd if the supply curve is S0 and Pb - Pe if the supply curve is S1. 
D)  is Pc - Pd if the supply curve is S0 and Pc - Pe if the supply curve is S1.

Question 19

What is regulatory capture?

Accepted Answer

A)  It is a situation in which a policy maker seeks to improve his election prospects by aligning himself with a powerful special interest group which will finance his political campaign. 
B)  It is the exchange of political support between a regulatory agency and the regulated firm resulting in both parties capturing economic rents. 
C)  It is a situation in which a firm being regulated successfully influences the regulatory agency's actions to benefit the interests of the firm, rather than the public interest. 
D)  It is a situation in which a regulatory agency uses its authority to force actions that are not favored by the regulated firms but are in the public's interest. 
A)  It is a situation in which a policy maker seeks to improve his election prospects by aligning himself with a powerful special interest group which will finance his political campaign. 
B)  It is the exchange of political support between a regulatory agency and the regulated firm resulting in both parties capturing economic rents. 
C)  It is a situation in which a firm being regulated successfully influences the regulatory agency's actions to benefit the interests of the firm, rather than the public interest. 
D)  It is a situation in which a regulatory agency uses its authority to force actions that are not favored by the regulated firms but are in the public's interest.

Question 20

If the marginal tax rate is greater than the average tax rate,the tax structure is described as regressive.

Accepted Answer

A) True 
 B)False

According to projections for 2013 by the Tax Policy Center,the 20 percent of U.S.taxpayers who make the highest incomes

In the United States,over the past 40 years federal revenues as a share of gross domestic product have

The public choice model raises questions about the government's ability to regulate economic activity efficiently.Which of the following statements represents the views of most economists with regard to the role of government?

Economists James Buchanan and Gordon Tullock are well-known for developing

In the United States,the largest source of funds for public schools is

Studies by the U.S.Census Bureau have shown that

What is the United States government's formal definition of the poverty line?

From 1970 to 2006,the poverty rate in East Asia rose slightly but the level of poverty in sub-Saharan Africa fell dramatically.

What are the two types of taxes that working individuals pay on their earnings?

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold,

The Arrow impossibility theorem explains

If grocery stores were legally required to charge a 10-cent fee for disposable grocery bags,who would bear the largest burden of this fee?

Figure 18-1 -Refer to Figure 18-1.Area B+C+F+G represents

What is logrolling?

At the state and local levels in the United States,the largest source of tax revenue is

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold,the producer's burden of the tax

What is regulatory capture?

If the marginal tax rate is greater than the average tax rate,the tax structure is described as regressive.

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

According to projections for 2013 by the Tax Policy Center,the 20 percent of U.S.taxpayers who make the highest incomes

In the United States,over the past 40 years federal revenues as a share of gross domestic product have

The public choice model raises questions about the government's ability to regulate economic activity efficiently.Which of the following statements represents the views of most economists with regard to the role of government?

Economists James Buchanan and Gordon Tullock are well-known for developing

In the United States,the largest source of funds for public schools is

Studies by the U.S.Census Bureau have shown that

What is the United States government's formal definition of the poverty line?

From 1970 to 2006,the poverty rate in East Asia rose slightly but the level of poverty in sub-Saharan Africa fell dramatically.

What are the two types of taxes that working individuals pay on their earnings?

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold,

The Arrow impossibility theorem explains

If grocery stores were legally required to charge a 10-cent fee for disposable grocery bags,who would bear the largest burden of this fee?

Figure 18-1 -Refer to Figure 18-1.Area B+C+F+G represents

What is logrolling?

At the state and local levels in the United States,the largest source of tax revenue is

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold,the producer's burden of the tax

What is regulatory capture?

If the marginal tax rate is greater than the average tax rate,the tax structure is described as regressive.

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