Question 1

Transfer payments are "exhaustive" in that they directly absorb resources, whereas government purchases are "nonexhaustive."

Accepted Answer

A) True 
 B)False

Question 2

The efficiency loss of a tax is the idea that

Accepted Answer

A)  in addition to taking income from the citizenry, taxes also increase the rate of inflation.
B)  taxes cause a decline in output for which marginal benefit exceeds marginal cost.
C)  taxes diminish incentives to work.
D)  government spends dollars less efficiently than do households and businesses.E) B) and D)
F) B) and C)

Question 3

The progressive structure of the income-tax system is based on the

Accepted Answer

A)  benefits-received principle.
B)  principle of diminishing returns.
C)  ability-to-pay principle.
D)  principle that "taxes are the price we pay for civilization."E) A) and B)
F) B) and C)

Question 4

(Consider This)  Proponents of a value-added tax (VAT)  claim that a VAT

Accepted Answer

A)  is progressive, leading to a more equitable distribution of income.
B)  equalizes the tax burden between buyers and sellers of goods.
C)  is proportional, so all income groups pay a fair share.
D)  penalizes consumption and encourages savings and investment.E) B) and C)
F) A) and D)

Question 5

A tax is progressive if the average tax rate rises as income increases.

Accepted Answer

A) True 
 B)False

Question 6

About two-thirds of all federal spending is for national defense.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements about specific excise taxes is true?

Accepted Answer

A)  These taxes are levied on a wide range of consumer goods.
B)  These taxes are usually transparent to (and easily reckoned by)  the buyers.
C)  A large portion of these taxes are often borne by the sellers, not shifted to the buyers.
D)  In the U.S., these taxes are more common than sales taxes.E) All of the above
F) A) and D)

Question 8

In 2013, U.S.governments (local, state, and federal)  employed approximately how many million workers?

Accepted Answer

A)  16.0
B)  19.4
C)  21.9
D)  23.5E) A) and B)
F) C) and D)

Question 9

The benefits-received principle of taxation is used to support corporate and personal income taxes.

Accepted Answer

A) True 
 B)False

Question 10

Which is the most important source of tax revenue for local governments?

Accepted Answer

A)  property taxes
B)  corporate income taxes
C)  sales and excise taxes
D)  personal income taxesE) A) and B)
F) B) and D)

Question 11

(Consider This)  Which of the following claims is not made by opponents of a value-added tax (VAT) ?

Accepted Answer

A)  Savings and investment is discouraged because future consumption is penalized.
B)  The VAT is regressive, potentially leading to additional progressive taxes to offset the regressive VAT.
C)  Sellers bear a disproportionately large burden of the tax.
D)  The VAT is a hidden tax, and thus easier to raise to support the expansion of government.E) B) and C)
F) A) and D)

Question 12

In 2014, the so-called Tax Freedom Day in the U.S.occurred in

Accepted Answer

A)  February.
B)  April.
C)  August.
D)  June.E) B) and C)
F) All of the above

Question 13

Sales taxes on consumer goods are regressive because poor people consume a larger proportion of their incomes than do rich people.

Accepted Answer

A) True 
 B)False

Question 14

According to data compiled by the Bureau of Economic Analysis, in 2015, total government spending (comprising purchases and transfers)  in the U.S.was about

Accepted Answer

A)  10 percent of the economy's total output.
B)  33 percent of the economy's total output.
C)  60 percent of the economy's total output.
D)  75 percent of the economy's total output.E) All of the above
F) B) and C)

Question 15

Approximately what percentage of the U.S.labor force works for U.S.governments at the federal, state, and local levels (as of 2013) ?

Accepted Answer

A)  8
B)  11
C)  14
D)  22E) None of the above
F) A) and D)

Question 16

"Transfer payments" may be thought of as

Accepted Answer

A)  wages and salaries.
B)  purchases of services.
C)  taxes in reverse.
D)  expenditures on products.E) C) and D)
F) A) and B)

Question 17

(Last Word)  In 2012, approximately what percentage of household income was transferred from the top two quintiles to the lowest three quintiles?

Accepted Answer

A)  zero
B)  10
C)  15
D)  22E) B) and D)
F) B) and C)

Question 18

When an excise tax or sales tax is imposed on a product, the sellers are always able to shift the burden of the tax on to the buyers.

Accepted Answer

A) True 
 B)False

Question 19

A regressive tax means that if someone earning $25,000 pays $5,000, someone earning $50,000 must pay

Accepted Answer

A)  less than $5,000.
B)  less than $10,000.
C)  more than $10,000 but less than $15,000.
D)  more than $15,000 but less than $20,000.E) B) and D)
F) B) and C)

Question 20

The tax rates embodied in the federal personal income tax are such that

Accepted Answer

A)  a rising absolute amount, but a declining proportion, of income is paid in taxes.
B)  the marginal and average tax rates are equal, making the tax progressive.
C)  the average tax rate rises more rapidly than does the marginal tax rate as income rises.
D)  the marginal tax rate is higher than the average tax rate, causing the average tax rate to rise as income rises.E) A) and B)
F) B) and C)

Exam 20: Public Finance: Expenditures and Taxes

In 2014, the so-called Tax Freedom Day in the U.S.occurred in

Correct AnswerverifiedShow Answer

The efficiency loss of a tax is the idea that

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In 2013, U.S.governments (local, state, and federal) employed approximately how many million workers?

Correct AnswerverifiedShow Answer

(Consider This) Proponents of a value-added tax (VAT) claim that a VAT

Correct AnswerverifiedShow Answer

About two-thirds of all federal spending is for national defense.

Correct AnswerverifiedShow Answer

"Transfer payments" may be thought of as

Correct AnswerverifiedShow Answer

The progressive structure of the income-tax system is based on the

Correct AnswerverifiedShow Answer

According to data compiled by the Bureau of Economic Analysis, in 2015, total government spending (comprising purchases and transfers) in the U.S.was about

Correct AnswerverifiedShow Answer

The tax rates embodied in the federal personal income tax are such that

Correct AnswerverifiedShow Answer

A tax is progressive if the average tax rate rises as income increases.

Correct AnswerverifiedShow Answer

Transfer payments are "exhaustive" in that they directly absorb resources, whereas government purchases are "nonexhaustive."

Correct AnswerverifiedShow Answer

When an excise tax or sales tax is imposed on a product, the sellers are always able to shift the burden of the tax on to the buyers.

Correct AnswerverifiedShow Answer

The benefits-received principle of taxation is used to support corporate and personal income taxes.

Correct AnswerverifiedShow Answer

(Consider This) Which of the following claims is not made by opponents of a value-added tax (VAT) ?

Correct AnswerverifiedShow Answer

Which of the following statements about specific excise taxes is true?

Correct AnswerverifiedShow Answer

Sales taxes on consumer goods are regressive because poor people consume a larger proportion of their incomes than do rich people.

Correct AnswerverifiedShow Answer

Approximately what percentage of the U.S.labor force works for U.S.governments at the federal, state, and local levels (as of 2013) ?

Correct AnswerverifiedShow Answer

Which is the most important source of tax revenue for local governments?

Correct AnswerverifiedShow Answer

(Last Word) In 2012, approximately what percentage of household income was transferred from the top two quintiles to the lowest three quintiles?

Correct AnswerverifiedShow Answer

A regressive tax means that if someone earning $25,000 pays $5,000, someone earning $50,000 must pay

Correct AnswerverifiedShow Answer

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