Question 1

Many tax-funded programs are intended to:

Accepted Answer

A)  increase efficiency.
B)  increase income inequality.
C)  provide basic human needs.
D)  transfer surplus from producers to consumers.E) C) and D)
F) B) and D)

Question 2

The primary intent of a tax on tobacco is to:

Accepted Answer

A)  reduce its consumption.
B)  raise government revenues.
C)  increase market surplus.
D)  support producers of tobacco.E) A) and B)
F) All of the above

Question 3

The table shown displays the marginal tax rates that correspond to each taxable income bracket for an individual.

What is the average tax rate for a person with $45,000 of taxable income?

Accepted Answer

A)  10 percent
B)  15 percent
C)  25 percent
D)  17 percentE) None of the above
F) All of the above

Question 4

In the real world, lump-sum taxes are:

Accepted Answer

A)  often perceived as unfair.
B)  rarely used.
C)  very efficient.
D)  All of these are true.E) B) and D)
F) A) and B)

Question 5

FICA, the tax that supports U.S. Medicare and Social Security programs, is generally:

Accepted Answer

A)  proportional.
B)  progressive.
C)  regressive.
D)  a flat tax that adjusts with inflation.E) B) and D)
F) C) and D)

Question 6

Instead of trying to balance the budget every year, it is easier for a government to:

Accepted Answer

A)  balance the budget over the business cycle.
B)  allow deficit spending only in times of economic downturn.
C)  allow surpluses to build during times of economic booms.
D)  All of these are true.E) B) and D)
F) A) and D)

Question 7

Suppose the government is considering imposing a $6 per unit tax in one of the markets shown in graphs I, II, III, and IV.

In which graph would this tax generate the largest revenue?

Accepted Answer

A)  I
B)  II
C)  III
D)  IVE) C) and D)
F) A) and D)

Question 8

Which of the following is an example of a tax-funded program intended to provide basic human needs?

Accepted Answer

A)  Public education
B)  Police protection
C)  Health care
D)  National defenseE) None of the above
F) B) and D)

Question 9

Suppose the government is considering imposing a tax in one of the markets shown in graphs I, II, III, and IV.

If the government's goal is to raise as much revenue as possible while minimizing deadweight loss, it should impose the tax in the market in which graph?

Accepted Answer

A)  I
B)  II
C)  III
D)  IVE) B) and C)
F) All of the above

Question 10

The side of the market that is more inelastic:

Accepted Answer

A)  will bear more of the tax burden.
B)  will bear less of the tax burden.
C)  will share an equal amount of the tax burden.
D)  can determine who will shoulder the majority of the tax burden.E) None of the above
F) A) and B)

Question 11

Suppose Jayden earns $80,000 per year and pays $16,000 in taxes, while Giada earns $100,000 per year and pays $16,000 in taxes. This tax system must be:

Accepted Answer

A)  flat.
B)  proportional.
C)  progressive.
D)  lump-sum.E) A) and B)
F) B) and D)

Question 12

Federal government spending in the United States:

Accepted Answer

A)  has historically been greater than the revenues generated.
B)  is mostly not discretionary.
C)  is majorly discretionary.
D)  has historically been less than the revenues generated, until the last 20 years.E) A) and D)
F) B) and C)

Question 13

Research shows that people rearrange their income from different sources to reduce their:

Accepted Answer

A)  tax rate.
B)  necessary work hours.
C)  total bill.
D)  tax burden.E) B) and C)
F) A) and B)

Question 14

The graph shown depicts a tax being imposed, causing demand to shift from D1 to D2.  What change does this tax cause?

Accepted Answer

A)  An increase in consumption from Q1 to Q2
B)  A decrease in consumption from Q2 to Q1
C)  A decrease in the price consumers pay from P3 to P1
D)  A decrease in the price suppliers receive from P3 to P1E) A) and C)
F) A) and B)

Question 15

If the price effect outweighs the quantity effect, then a tax _______ will _______ revenue.

Accepted Answer

A)  increase; raise
B)  decrease; raise
C)  increase; lower
D)  increase; not changeE) A) and C)
F) C) and D)

Question 16

Raising taxes:

Accepted Answer

A)  always raises tax revenues.
B)  always decreases tax revenues.
C)  can sometimes decrease tax revenues.
D)  never decreases tax revenues.E) All of the above
F) A) and B)

Question 17

Suppose Bob earns $20,000 per year and pays $2,000 in taxes, while Cindy earns $40,000 per year and pays $4,000 in taxes. This is an example of a _______ tax.

Accepted Answer

A)  progressive
B)  regressive
C)  proportional
D)  lump-sumE) B) and D)
F) B) and C)

Question 18

Which of the following is an example of entitlement spending?

Accepted Answer

A)  National defense
B)  Social Security
C)  Police protection
D)  Garbage collectionE) None of the above
F) B) and D)

Question 19

In general, more efficient taxes have:

Accepted Answer

A)  lower administrative burdens.
B)  more complexity.
C)  lower revenues given the size of the tax.
D)  All of these are true.E) None of the above
F) A) and B)

Question 20

The federal income tax _______ than a state sales tax.

Accepted Answer

A)  has a lower administrative burden
B)  is less efficient
C)  is less complex
D)  is easier to administerE) All of the above
F) B) and C)

Exam 20: Taxation and the Public Budget

Many tax-funded programs are intended to:

Correct Answer
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Correct Answer
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If the price effect outweighs the quantity effect, then a tax _ will _ revenue.

Correct Answer
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Which of the following is an example of entitlement spending?

Correct Answer
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Instead of trying to balance the budget every year, it is easier for a government to:

Correct Answer
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Raising taxes:

Correct Answer
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Research shows that people rearrange their income from different sources to reduce their:

Correct Answer
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Federal government spending in the United States:

Correct Answer
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Suppose the government is considering imposing a $6 per unit tax in one of the markets shown in graphs I, II, III, and IV. <p><b><span style="font-size:20pt;"><span style="color:#FF0000;"> In which graph would this tax generate the largest revenue?

Correct Answer
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In the real world, lump-sum taxes are:

Correct Answer
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The side of the market that is more inelastic:

Correct Answer
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The federal income tax _______ than a state sales tax.

Correct Answer
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Suppose Bob earns $20,000 per year and pays $2,000 in taxes, while Cindy earns $40,000 per year and pays $4,000 in taxes. This is an example of a _______ tax.

Correct Answer
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In general, more efficient taxes have:

Correct Answer
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The graph shown depicts a tax being imposed, causing demand to shift from D1 to D2. What change does this tax cause?

Correct Answer
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FICA, the tax that supports U.S. Medicare and Social Security programs, is generally:

Correct Answer
verified

Which of the following is an example of a tax-funded program intended to provide basic human needs?

Correct Answer
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Suppose Jayden earns $80,000 per year and pays $16,000 in taxes, while Giada earns $100,000 per year and pays $16,000 in taxes. This tax system must be:

Correct Answer
verified

The primary intent of a tax on tobacco is to:

Correct Answer
verified

The table shown displays the marginal tax rates that correspond to each taxable income bracket for an individual. What is the average tax rate for a person with $45,000 of taxable income?

Correct Answer
verified

Exam 20: Taxation and the Public Budget

Many tax-funded programs are intended to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the price effect outweighs the quantity effect, then a tax _______ will _______ revenue.

Correct AnswerverifiedShow Answer

Which of the following is an example of entitlement spending?

Correct AnswerverifiedShow Answer

Instead of trying to balance the budget every year, it is easier for a government to:

Correct AnswerverifiedShow Answer

Raising taxes:

Correct AnswerverifiedShow Answer

Research shows that people rearrange their income from different sources to reduce their:

Correct AnswerverifiedShow Answer

Federal government spending in the United States:

Correct AnswerverifiedShow Answer

Suppose the government is considering imposing a $6 per unit tax in one of the markets shown in graphs I, II, III, and IV. <p><b><span style="font-size:20pt;"><span style="color:#FF0000;"> In which graph would this tax generate the largest revenue?

Correct AnswerverifiedShow Answer

In the real world, lump-sum taxes are:

Correct AnswerverifiedShow Answer

The side of the market that is more inelastic:

Correct AnswerverifiedShow Answer

The federal income tax _______ than a state sales tax.

Correct AnswerverifiedShow Answer

Suppose Bob earns $20,000 per year and pays $2,000 in taxes, while Cindy earns $40,000 per year and pays $4,000 in taxes. This is an example of a _______ tax.

Correct AnswerverifiedShow Answer

In general, more efficient taxes have:

Correct AnswerverifiedShow Answer

The graph shown depicts a tax being imposed, causing demand to shift from D1 to D2. What change does this tax cause?

Correct AnswerverifiedShow Answer

FICA, the tax that supports U.S. Medicare and Social Security programs, is generally:

Correct AnswerverifiedShow Answer

Which of the following is an example of a tax-funded program intended to provide basic human needs?

Correct AnswerverifiedShow Answer

Suppose Jayden earns $80,000 per year and pays $16,000 in taxes, while Giada earns $100,000 per year and pays $16,000 in taxes. This tax system must be:

Correct AnswerverifiedShow Answer

The primary intent of a tax on tobacco is to:

Correct AnswerverifiedShow Answer

The table shown displays the marginal tax rates that correspond to each taxable income bracket for an individual. What is the average tax rate for a person with $45,000 of taxable income?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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If the price effect outweighs the quantity effect, then a tax _ will _ revenue.

Correct Answer
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