Deck 10: The Government in the Economy: Taxation and Regulation

Question 1

________ are the largest source of the federal tax revenue.

A) Individual income taxes
B) Corporate income taxes
C) Excise taxes
D) Payroll taxes

Answer 1

Individual income taxes

Question 2

________ taxes represent about a third of the federal government's receipts.

A) Excise
B) Corporate income
C) Payroll
D) Personal income

Answer 2

Payroll

Question 3

________ is generated from taxing profits earned by firms.

A) Excise tax
B) Sales tax
C) Corporate income tax
D) Payroll tax

Answer 3

Corporate income tax

Question 4

Taxes listed as Federal Insurance Contribution Act taxes on the employee paystub are ________.

A) payroll taxes
B) value-added taxes
C) income taxes
D) excise taxes

Question 5

Which of the following is true in the United States?

A) Local governments cannot collect taxes.
B) Only state governments can collect taxes.
C) Only the federal government can collect taxes.
D) The central and local governments collect taxes.

Question 6

The second largest component of the federal government revenues is receipts from ________.

A) corporate income taxes
B) excise taxes
C) social insurance taxes
D) value-added taxes

Question 7

Corporate income tax in the United States is mainly collected by the ________ and accounts for roughly ________ of the total tax revenue.

A) federal government; 10 percent
B) federal government; 30 percent
C) state and local governments; 10 percent
D) state and local governments; 30 percent

Question 8

A(n)________ is a tax on wages that employers are required to withhold from employees' pay.

A) social insurance tax
B) excise tax
C) income tax
D) value-added tax

Question 9

If the total revenue collected by the federal government in a particular year is $1.2 billion and the total amount spent by the government during the same year is $3.8 billion,what is the budget deficit?

A) $1.6 billion
B) $2.6 billion
C) $2.2 billion
D) $5 billion

Question 10

The government of Lithasia ran a budget deficit of $60,000 in 2014.If the tax revenue of the Lithasian government in 2014 was $320,000,000,how much did the government spend that year?

A) $319,940,000
B) $1,060,000
C) $320,060,000
D) $49,000,000

Question 11

A budget surplus occurs when ________.

A) government spending exceeds tax revenue
B) tax revenue exceeds government spending
C) imports exceed exports
D) exports exceed imports

Question 12

________ taxes are taxes paid when purchasing specific goods such as alcohol,tobacco,and gasoline.

A) Property
B) Payroll
C) Wealth
D) Excise

Question 13

The government of Putania spent $67,000,000 in a particular year,and the total tax receipts of the government in that year were $120,000.Calculate the budget deficit.

A) $600,000
B) $680,000
C) $67,120,000
D) $66,880,000

Question 14

A ________ occurs when government spending exceeds tax revenue.

A) budget deficit
B) negative externality
C) consumer surplus
D) positive externality

Question 15

A payroll tax is also known as a(n)________.

A) excise tax
B) corporate income tax
C) personal income tax
D) social insurance tax

Question 16

What is the budget surplus if the total amount of taxes collected by a local government is $171,000 and the total amount spent is $90,000?

A) $81,000
B) $100,000
C) $70,000
D) $262,000

Question 17

________ is the amount of money a government collects through a tax.

A) A tax incidence
B) Tax bracket
C) A tax revenue
D) Tax burden

Question 18

The contribution of ________ to federal tax receipts is larger than the contribution of ________.

A) personal income taxes; corporate income taxes
B) corporate income taxes; payroll taxes
C) corporate income taxes; personal income taxes
D) excise taxes; social insurance taxes

Question 19

Over the years,U.S.government spending has ________.

A) increased but government revenue has decreased
B) decreased but government revenue has increased
C) decreased and government revenue has also decreased
D) increased and government revenue has also increased

Question 20

Which of the following account for the largest portion of state and local government receipts?

A) Individual income taxes
B) Corporate income taxes
C) Miscellaneous taxes and fees
D) Property taxes

Question 21

A tax collected at each stage of the production process is called a(n)________ tax.

A) payroll
B) excise
C) value-added
D) wealth

Question 22

For 2017,the U.S.individual income tax has seven different marginal tax rates ranging from 10 percent to 39.6 percent.The U.S.individual income tax is what type of tax?

A) Property tax
B) Regressive tax
C) Proportional tax
D) Progressive tax

Question 23

A ________ tax is similar to a sales tax.

A) payroll
B) value-added
C) wealth
D) excise

Question 24

________ taxes are paid by a buyer as a percentage of the market price of an item.

A) Sales
B) Wealth
C) Payroll
D) Property

Question 25

For 2017,Medicare payroll taxes collected from employees represent 1.45 percent of each dollar of labor income earned.The Medicare payroll tax is what type of tax?

A) Sales tax
B) Regressive tax
C) Proportional tax
D) Progressive tax

Question 26

For 2017,Social Security payroll taxes collected from employees represent 6.2 percent of the first $127,200 of labor income earned,while earnings beyond $127,200 are not taxed.Social security is what type of tax?

A) Excise tax
B) Regressive tax
C) Proportional tax
D) Progressive tax

Question 27

A marginal tax rate is the ________.

A) total amount of taxes paid
B) tax rate on the first dollar of income earned
C) tax rate on the last dollar of income earned
D) total amount of taxes paid divided by taxable income

Question 28

What are the objectives of government taxation and spending?

Question 29

Transfer payments refer to payments from the government to ________.

A) the employees who work at various public departments
B) individual states
C) private contractors who undertake infrastructure projects
D) certain individuals or groups such as the elderly or the unemployed

Question 30

The government redistributes funds via transfer payments in order to ________.

A) reduce the number of private transactions
B) increase competition among domestic producers
C) finance the operation of its various departments
D) reduce inequality among the citizens

Question 31

If the marginal tax rate facing a consumer on the last dollar of earned income is greater than the average tax rate,the tax system is ________.

A) using only payroll taxes
B) proportional
C) regressive
D) progressive

Question 32

What are transfer payments? Give two examples.

Question 33

All of the following state governments do not collect individual income taxes from their residents,except for ________.

A) Florida
B) Texas
C) Nevada
D) Illinois

Question 34

A restaurant charges its customers 12 percent of the total food price in tax.This is an example of a ________ tax.

A) payroll
B) wealth
C) property
D) sales

Question 35

Which of the following is collected only by local and state governments?

A) Excise tax
B) Personal income tax
C) Toll tax
D) Payroll tax

Question 36

One reason governments impose taxes is to ________.

A) reduce the number of transactions in an economy
B) redistribute funds via transfer payments
C) increase competition among producers
D) increase the volume of exports

Question 37

Local governments usually rely on ________ taxes to fund schools,libraries,and public services such as police and fire protection.

A) payroll
B) excise
C) value-added
D) property

Question 38

Which of the following is true of individual income taxes?

A) Individual income taxes are collected only by the federal government.
B) Individual income taxes are collected only by state governments.
C) All states in the U.S. collect individual income taxes.
D) The rate of income tax imposed by states in the U.S. varies.

Question 39

Which of the following taxes is collected only by the federal government?

A) Corporate income tax
B) Social insurance tax
C) Property tax
D) Excise tax

Question 40

Governments impose taxes for all of the following reasons except ________.

A) correcting market failures and externalities
B) generating profits
C) raising revenues
D) redistributing income through the use of transfer payments

Question 41

Scenario: You are a U.S. taxpayer who had taxable income of $200,000 in 2017. You paid $49,400 in individual income taxes, and you paid 33 cents of the last dollar you earned as individual income tax.
Refer to the above scenario.What is your average tax rate? Explain your answer.

A) 0 percent
B) 24.7 percent
C) 33 percent
D) 49.4 percent

Question 42

Which of the following is true of a progressive tax system?

A) High-income households pay a higher percentage of their income in taxes.
B) Low-income households pay a higher percentage of their income in taxes.
C) All households pay the same amount of taxes irrespective of their income.
D) All households pay the same percentage of their income in taxes.

Question 43

Differentiate between a progressive tax system and a regressive tax system.

Question 44

If Kate pays an average tax rate of 12.5 percent and her total income is $34,000,she pays ________ in tax.

A) $5,500
B) $17,000
C) $4,250
D) $3,200

Question 45

Scenario: You are a U.S. taxpayer who had taxable income of $200,000 in 2017. You paid $49,400 in individual income taxes, and you paid 33 cents of the last dollar you earned as individual income tax.
Refer to the above scenario.Your marginal tax rate is ________.

A) 0 percent
B) 24.7 percent
C) 33 percent
D) 49.4 percent

Question 46

The table below shows the tax brackets for different income groups in a country:

Refer to the table above.If Tom has a taxable income of $62,000,he faces a marginal tax rate of ________.

A) 10 percent
B) 15 percent
C) 20 percent
D) 30 percent

Question 47

The table below shows the tax brackets for different income groups in a country:

Refer to the table above.This is an example of a ________ tax system.

A) progressive
B) regressive
C) proportional
D) cardinal

Question 48

A ________ tax system is one in which tax rates increase with taxable base incomes.

A) regressive
B) progressive
C) proportional
D) supplementary

Question 49

The federal government spends most of its revenue on which top two categories?

A) National defense and Social Security
B) Social Security and Medicare
C) National defense and education
D) Social Security and education

Question 50

The federal government relies on ________ to limit inequality.

A) regressive taxes
B) proportional taxes
C) progressive taxes
D) marginal taxes

Question 51

The average tax rate faced by an individual is the ________.

A) total tax paid by her divided by the total income earned
B) total revenue received by the government divided by the number of taxpayers
C) percentage of the last dollar earned that a household pays as a tax
D) difference between the highest tax rate and the lowest tax rate

Question 52

In a progressive tax system,________.

A) the average tax rate equals the marginal tax rate
B) the marginal tax rate exceeds the average tax rate
C) the average tax rate exceeds the marginal tax rate
D) the average tax rate is equal for all taxpayers

Question 53

The marginal income tax rate is the ________.

A) total tax paid by an individual divided by the total income earned
B) difference between the highest and lowest income tax rates charged by a state
C) percentage of the last dollar earned that a household pays in taxes
D) total revenue received by the government divided by the number of taxpayers

Question 54

Joseph earns $75,000.If his average tax rate is 18 percent,what is the total amount of money that he pays in tax?

A) $1,500
B) $13,500
C) $2,700
D) $15,000

Question 55

The table below shows the tax brackets for different income groups in a country:

Refer to the table above.If Jack has an annual income of $40,000,into which tax bracket does he fall?

A) 10 percent
B) 15 percent
C) 23 percent
D) 30 percent

Question 56

Which of the following programs provides economic security to the elderly,disabled,widows,and fatherless children in the United States?

A) Social Security
B) Income security
C) The federal household assistance program
D) The federal income administration program

Question 57

Mr.Smith pays $20,000 annually in tax.If his annual income is $100,000,what is his average tax?

A) 5 percent
B) 12 percent
C) 2 percent
D) 20 percent

Question 58

The state governments in the United States spend the largest percentage of their funds on ________.

A) public welfare
B) Social Security
C) national defense
D) education

Question 59

The two biggest items of spending for state governments are ________.

A) highways and Social Security
B) Social Security and Medicare
C) public welfare and hospitals
D) education and public welfare

Question 60

Which of the following accounts for the largest portion of federal government spending?

A) Education
B) Policing
C) Infrastructure
D) National defense

Question 61

The table below shows the tax brackets for different income groups in a country:

Refer to the table above.If Jack has an annual income of $50,000 and Jill earns $77,500,which of the following is true?

A) Jack and Jill pay an equal amount of tax.
B) The average rates of tax paid by Jack and Jill are equal.
C) The marginal tax rate for Jack is higher than the marginal tax rate for Jill.
D) Jack and Jill fall in the same tax bracket.

Question 62

Scenario: There are 4 households in a locality. The annual income of the first household is $20,000, the annual income of the second household is $47,000, the annual income of the third household is $50,000, and the annual income of the fourth household is $71,000.
Refer to the scenario above.Which family pays the highest percentage of its income in tax if the income taxes collected by the local government are regressive in nature?

A) The first household
B) The second household
C) The third household
D) The fourth household

Question 63

Scenario: There are 4 households in a locality. The annual income of the first household is $20,000, the annual income of the second household is $47,000, the annual income of the third household is $50,000, and the annual income of the fourth household is $71,000.
Refer to the scenario above.If the fourth household pays the lowest percentage of its income in tax,it can be inferred that the government follows a ________ tax system.

A) progressive
B) proportional
C) Pigouvian
D) regressive

Question 64

The table below shows the tax brackets for different income groups in a country:

Refer to the table above.If Bob earns $105,000 per year,he has to pay a tax of approximately ________.

A) $6,400
B) $12,600
C) $18,675
D) $19,600

Question 65

Scenario: There are 4 households in a locality. The annual income of the first household is $20,000, the annual income of the second household is $47,000, the annual income of the third household is $50,000, and the annual income of the fourth household is $71,000.
Refer to the scenario above.Which family pays the lowest percentage of its income in tax if the government follows a progressive tax system?

A) The first household
B) The second household
C) The third household
D) The fourth household

Question 66

The table below shows the tax brackets for different income groups in a country:

Refer to the table above.Bob says that the next dollar he earns will be taxed 50 percent more heavily than the previous dollar he earned.How much has Bob earned so far in the year?

A) $10,500
B) $40,200
C) $98,000
D) $145,000

Question 67

Scenario: There are 4 households in a locality. The annual income of the first household is $20,000, the annual income of the second household is $47,000, the annual income of the third household is $50,000, and the annual income of the fourth household is $71,000.
Refer to the scenario above.If the income tax rate for the fourth household is higher than the income tax rate for the second household,it can be inferred that the government follows a ________ income tax system.

A) progressive
B) regressive
C) proportional
D) value-added

Question 68

Social Security taxes in the U.S.tend to be ________.

A) proportional
B) progressive
C) regressive
D) negative

Question 69

The table below shows the income tax rates applicable to various income groups in Bonland.
Taxable Income Tax Bracket
$0-$6,000 10 percent
$6,001-$30,000 15 percent
$30,001-$75,000 18 percent
$75,001-$125,000 20 percent
$125,001 and above 25 percent
If Mary's taxable income is $80,000,calculate her:
a)total tax paid.
b)marginal tax rate.
c)average tax rate.

Question 70

In the United States,income taxes are ________.

A) regressive
B) progressive
C) proportional
D) marginal

Question 71

Scenario: There are 4 households in a locality. The annual income of the first household is $20,000, the annual income of the second household is $47,000, the annual income of the third household is $50,000, and the annual income of the fourth household is $71,000.
Refer to the scenario above.If the first household pays 20 percent of its income in tax,the second household pays 17.5 percent of its income in tax,the third household pays 13 percent of its income in tax,and the fourth household pays 10 percent of its income in tax,income taxes are ________ in nature.

A) progressive
B) regressive
C) lump sum
D) proportional

Question 72

In a proportional tax system,________.

A) the average tax rate faced by an individual exceeds the marginal tax rate
B) the marginal tax rate faced by an individual exceeds the average tax rate
C) the average tax rate equals the marginal tax rate
D) the marginal tax rates faced by all households are equal

Question 73

Property taxes in the U.S.are ________.

A) progressive
B) regressive
C) proportional
D) negative

Question 74

The table below shows the tax brackets for different income groups in a country:

Refer to the table above.If Beth earns $60,000 per year,she has to pay a tax of ________.

A) $9,465.05
B) $1,600.50
C) $1,000.50
D) $24,000

Question 75

The table below shows the tax brackets for different income groups in a country:

Refer to the table above.If Bob pays $20,000 in tax,approximately how much does he earn per year?

A) $60,760
B) $100,760
C) $110,760
D) $115,760

Question 76

Scenario: There are 4 households in a locality. The annual income of the first household is $20,000, the annual income of the second household is $47,000, the annual income of the third household is $50,000, and the annual income of the fourth household is $71,000.
Refer to the scenario above.If the local government follows a progressive tax system,which family pays the largest amount in tax?

A) The first household
B) The second household
C) The third household
D) The fourth household

Question 77

Scenario: There are 4 households in a locality. The annual income of the first household is $20,000, the annual income of the second household is $47,000, the annual income of the third household is $50,000, and the annual income of the fourth household is $71,000.
Refer to the scenario above.If each family pays 12 percent of its income in tax every year,the local government follows a(n)________ tax system.

A) cardinal
B) ordinal
C) progressive
D) proportional

Question 78

In a regressive tax system,________.

A) low-income households pay a higher percentage of their income in taxes
B) high-income households pay a higher percentage of their income in taxes
C) all households pay the same amount of taxes irrespective of their income
D) all households pay the same percentage of their income in taxes

Question 79

In a ________ tax system,the marginal tax rate declines with income.

A) progressive
B) regressive
C) proportional
D) marginal

Question 80

A ________ system is one in which households pay the same percentage of their incomes in taxes regardless of their income level.

A) progressive
B) regressive
C) proportional
D) complementary