Question 1

(Consider This)  Payout rates for state lotteries

Accepted Answer

A)  are considerably lower than payout rates from casinos.
B)  are considerably higher than payout rates from casinos.
C)  are roughly equal to the payout rates from casinos.
D)  cannot be compared with casino payout rates because states do not typically disclose their payout rates.E) None of the above
F) All of the above

Question 2

Tax incidence may be defined as the

Accepted Answer

A)  average tax rate of a given group of taxpayers.
B)  degree to which a tax falls on a particular person or group.
C)  tax burden, or taxes as a percent of GDP.
D)  number and range of goods and services that are taxeD.Topic: Tax Incidence and Efficiency LossE) B) and C)
F) A) and D)

Question 3

In 2013, U.S.governments (local, state, and federal)  employed roughly what percentage of the U.S.labor force?

Accepted Answer

A)  5 percent
B)  14 percent
C)  42 percent
D)  64 percentE) A) and D)
F) B) and D)

Question 4

(Consider This)  A value-added tax (VAT)

Accepted Answer

A)  is another name for a retail sales tax but is otherwise the same.
B)  is like a sales tax but is only imposed on the difference between a firm's sales and its purchases from other firms.
C)  is like an income tax but is only imposed on the difference between a person's income and his or her consumption.
D)  only applies to imported goods.E) A) and D)
F) B) and C)

Question 5

In general for an excise tax on a product, given supply, the more elastic is the demand for the product, the larger will be the portion of the tax shouldered by the buyers.

Accepted Answer

A) True 
 B)False

Question 6

The two largest sources of tax revenue for the U.S.federal government are

Accepted Answer

A)  excise taxes and customs duties.
B)  payroll taxes and excise taxes.
C)  personal income taxes and payroll taxes.
D)  personal income taxes and corporate income taxes.E) All of the above
F) B) and C)

Question 7

Most of the state and local government employees are in what area?

Accepted Answer

A)  health care
B)  education
C)  administration
D)  highwaysE) A) and B)
F) A) and C)

Question 8

Many states in the U.S.acquire significant amounts of funds from the following, except

Accepted Answer

A)  state-run lotteries.
B)  grants from the federal government.
C)  personal income taxes.
D)  property taxes.E) A) and B)
F) C) and D)

Question 9

The greater the elasticity of supply of and demand for a good, the

Accepted Answer

A)  smaller will be the efficiency loss of an excise tax on the good.
B)  more likely the good will be a public good rather than a private good.
C)  larger will be the efficiency loss of an excise tax on the good.
D)  larger will be the proportion of an excise tax on the good that will be shifted forward to consumers.E) A) and C)
F) A) and D)

Question 10

Payroll taxes account for more than one-third of federal tax revenues.

Accepted Answer

A) True 
 B)False

Question 11

One distinction between government purchases and transfer payments is that

Accepted Answer

A)  purchase are exhaustive, whereas transfers are nonexhaustive.
B)  purchase are nonexhaustive, whereas transfers are exhaustive.
C)  purchases are part of total government spending, whereas transfers are not.
D)  purchases are not part of total government spending, whereas transfers are.E) All of the above
F) None of the above

Question 12

The fact that high-income earners tend to earn a higher percentage of their incomes from rent and dividends, in contrast to low-income earners, makes the payroll taxes

Accepted Answer

A)  more progressive.
B)  proportional.
C)  more regressive.
D)  a flat tax.E) A) and B)
F) B) and C)

Question 13

Given demand, the more inelastic the supply of a product, the larger the portion of an excise tax that is borne by producers.

Accepted Answer

A) True 
 B)False

Question 14

The greater the elasticity of demand and supply, the greater is the efficiency loss of a tax.

Accepted Answer

A) True 
 B)False

Question 15

Which generalization is incorrect?

Accepted Answer

A)  Given supply, the more elastic the demand for a product, the larger is the portion of an excise tax that is shifted forward to consumers.
B)  Given demand, the more elastic the supply of a product, the larger is the portion of an excise tax that is borne by producers.
C)  Given supply, the more elastic the demand for a product, the larger is the portion of an excise tax that is borne by the sellers.
D)  Given demand, the less elastic the supply of a product, the larger is the portion of an excise tax that is shifted forward to consumers.E) A) and C)
F) None of the above

Question 16

Government purchases and transfer payments

Accepted Answer

A)  differ because the latter absorb resources while the former do not.
B)  differ because the former absorb resources while the latter do not.
C)  are alike because both are more inflationary than private spending.
D)  are alike because both absorb resources.E) B) and C)
F) A) and C)

Question 17

If your income increases from $10,000 per year to $14,000 per year and your tax payment increases from $2,000 to $2,840, the marginal tax rate

Accepted Answer

A)  is 20 percent.
B)  is 21 percent.
C)  is 25 percent.
D)  cannot be determined from the given data.E) A) and D)
F) B) and C)

Question 18

From 1960 to 2015, government purchases as a percentage of U.S.output have

Accepted Answer

A)  remained approximately constant.
B)  decreased.
C)  increased slightly.
D)  increased sharply.E) A) and D)
F) B) and C)

Question 19

One difference between sales and excise taxes is that

Accepted Answer

A)  sales taxes are only applied at the state level, while excise taxes are only applied at the federal level.
B)  excise taxes apply to a wide range of products, while sales taxes apply only to a select list of products.
C)  sales taxes are calculated as a percentage of the price paid, while excise taxes are levied on a per-unit basis.
D)  excise taxes are calculated as a percentage of the price paid, while sales taxes are levied on a per-unit basis.E) B) and C)
F) A) and C)

Question 20

Economists agree that corporations always shift the corporate income tax to consumers by raising product prices.

Accepted Answer

A) True 
 B)False

Exam 20: Public Finance: Expenditures and Taxes

The greater the elasticity of supply of and demand for a good, the

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The fact that high-income earners tend to earn a higher percentage of their incomes from rent and dividends, in contrast to low-income earners, makes the payroll taxes

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Many states in the U.S.acquire significant amounts of funds from the following, except

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Given demand, the more inelastic the supply of a product, the larger the portion of an excise tax that is borne by producers.

Correct AnswerverifiedShow Answer

The two largest sources of tax revenue for the U.S.federal government are

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The greater the elasticity of demand and supply, the greater is the efficiency loss of a tax.

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Most of the state and local government employees are in what area?

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One distinction between government purchases and transfer payments is that

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Government purchases and transfer payments

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Payroll taxes account for more than one-third of federal tax revenues.

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Economists agree that corporations always shift the corporate income tax to consumers by raising product prices.

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(Consider This) A value-added tax (VAT)

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From 1960 to 2015, government purchases as a percentage of U.S.output have

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Which generalization is incorrect?

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(Consider This) Payout rates for state lotteries

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In general for an excise tax on a product, given supply, the more elastic is the demand for the product, the larger will be the portion of the tax shouldered by the buyers.

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In 2013, U.S.governments (local, state, and federal) employed roughly what percentage of the U.S.labor force?

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If your income increases from $10,000 per year to $14,000 per year and your tax payment increases from $2,000 to $2,840, the marginal tax rate

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One difference between sales and excise taxes is that

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Tax incidence may be defined as the

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