Question 1

When a tax is imposed, the surplus that is lost to buyers and sellers but converted into tax revenue is:

Accepted Answer

A)  transferred to others through public programs.
B)  considered a cost of taxation.
C)  part of deadweight loss.
D)  All of these are true.E) C) and D)
F) A) and B)

Question 2

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

Consider two individuals: Griffin and Dalia. Griffin has $90,000 of taxable income and Dalia has $95,000 of taxable income. Which of the following statements is true?

Accepted Answer

A)  Dalia owes $3,625 more in taxes than Griffin.
B)  Griffin owes $1,250 more in taxes than Dalia.
C)  Dalia owes $1,250 more in taxes than Griffin.
D)  None of these are correct.E) B) and C)
F) B) and D)

Question 3

When a tax is imposed and some of the lost surplus becomes tax revenue, which group benefits?

Accepted Answer

A)  Consumers
B)  Producers
C)  Recipients of government services
D)  Only the governmentE) A) and C)
F) B) and C)

Question 4

A progressive tax:

Accepted Answer

A)  takes the same percentage from all taxpayers, regardless of income.
B)  requires those with low incomes to pay a smaller percentage of their income than high-income people.
C)  is levied such that low-income taxpayers pay a greater proportion of their income than high-income taxpayers.
D)  taxes everyone the same amount, regardless of income.E) B) and C)
F) None of the above

Question 5

Which of the following is not an example of a commonly tax-funded program?

Accepted Answer

A)  Public education
B)  Highways
C)  Housing for those in need
D)  Oil and gas productionE) B) and C)
F) All of the above

Question 6

Considering a given increase in price due to a tax, the less price elastic the demand curve is, the:

Accepted Answer

A)  larger the drop in equilibrium quantity.
B)  smaller the amount of deadweight loss created.
C)  larger the amount of deadweight loss created.
D)  more surplus is transferred to consumers.E) All of the above
F) A) and B)

Question 7

Suppose Bob earns $20,000 per year and Sue earns $100,000 a year. If a flat tax of 10 percent is imposed, Bob will pay _______ in taxes and Sue will pay_______ in taxes. This is an example of a _______ tax.

Accepted Answer

A)  $2,000; $10,000; proportional
B)  $2,000; $10,000; progressive
C)  $2,000; $10,000; lump-sum tax
D)  $200; $1,000; flat taxE) B) and D)
F) All of the above

Question 8

A tax will sometimes alter consumers' incentives. Which of the following statements about such a tax is true? This type of tax is meant to increase consumption. A tax designed to raise revenue may sometimes alter consumer incentives as a side effect. This type of tax is called a sin tax.

Accepted Answer

A)  III only
B)  I and II only
C)  II only
D)  I, II, and IIIE) B) and D)
F) None of the above

Question 9

A proportional tax:

Accepted Answer

A)  takes the same percentage from all taxpayers, regardless of income.
B)  requires those with low incomes to pay a smaller percentage of their income than high-income people.
C)  is levied such that low-income taxpayers pay a greater proportion of their income than high-income taxpayers.
D)  taxes everyone the same amount, regardless of income.E) A) and C)
F) A) and D)

Question 10

The administrative burden of taxes:

Accepted Answer

A)  is smallest with a lump-sum tax.
B)  depends on the amount of revenue generated.
C)  grows smaller as a tax gets larger.
D)  is the same across all types of taxes.E) None of the above
F) A) and C)

Question 11

In deciding which programs the government should fund with tax revenues:

Accepted Answer

A)  there is always perfect consensus before a program is funded.
B)  there is often widespread disagreement.
C)  a popular vote for new programs is conducted.
D)  each individual is able to decide where tax dollars are spent.E) B) and D)
F) All of the above

Question 12

A proportional tax:

Accepted Answer

A)  takes the same percentage from all taxpayers, regardless of income.
B)  requires those with low incomes to pay a smaller percentage of their income than high-income people.
C)  is levied such that low-income taxpayers pay a greater proportion of their income than high-income taxpayers.
D)  taxes everyone the same amount, regardless of income.E) B) and D)
F) All of the above

Question 13

A lump-sum tax is also known as a(n) :

Accepted Answer

A)  income tax.
B)  property tax.
C)  sales tax.
D)  head tax.E) B) and D)
F) A) and B)

Question 14

A sales tax is charged on:

Accepted Answer

A)  the earnings of individuals and corporations.
B)  income earned from buying and selling them investments.
C)  the wages paid to an employee.
D)  the value of a good or service being purchased.E) A) and B)
F) A) and D)

Question 15

The concept of incidence is used to describe:

Accepted Answer

A)  which tax bears the bigger burden.
B)  the unexpected tax revenue generated.
C)  who bears the burden of a tax.
D)  how often people are taxed.E) B) and C)
F) A) and B)

Question 16

Considering a given increase in price due to a tax, the more price elastic the supply curve is, the:

Accepted Answer

A)  larger the drop in equilibrium quantity.
B)  smaller the drop in equilibrium quantity.
C)  smaller the amount of deadweight loss created.
D)  less surplus is transferred to consumers.E) A) and D)
F) A) and C)

Question 17

Which term is defined as the logistical costs associated with implementing a tax?

Accepted Answer

A)  Deadweight loss
B)  Administrative burden
C)  Economic incidence
D)  Mandatory burdenE) A) and D)
F) All of the above

Question 18

When a tax is imposed, the surplus that is lost to buyers and sellers but converted into tax revenue is:

Accepted Answer

A)  considered a cost of taxation.
B)  part of deadweight loss.
C)  the sole source of deadweight loss.
D)  not part of deadweight loss.E) B) and C)
F) None of the above

Question 19

If the _______ effect is greater than the _______ effect, a tax cut will increase revenue.

Accepted Answer

A)  price; quantity
B)  quantity; income
C)  income; price
D)  quantity; priceE) C) and D)
F) None of the above

Question 20

The graph shown depicts a tax being imposed, causing demand to shift from D1 to D2. 1 − P3) . B) (P2 − P1) . C) (P4 − P2) . D) (P4 − P3) ." class="answers-bank-image d-inline" rel="preload" > The amount of the tax imposed is equal to:

Accepted Answer

A)  (P1 − P3) .
B)  (P2 − P1) .
C)  (P4 − P2) .
D)  (P4 − P3) .E) A) and B)
F) A) and D)

Exam 20: Taxation and the Public Budget

In deciding which programs the government should fund with tax revenues:

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When a tax is imposed, the surplus that is lost to buyers and sellers but converted into tax revenue is:

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Considering a given increase in price due to a tax, the more price elastic the supply curve is, the:

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A progressive tax:

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A sales tax is charged on:

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The administrative burden of taxes:

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The concept of incidence is used to describe:

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A lump-sum tax is also known as a(n) :

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A proportional tax:

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When a tax is imposed and some of the lost surplus becomes tax revenue, which group benefits?

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If the _______ effect is greater than the _______ effect, a tax cut will increase revenue.

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Suppose Bob earns $20,000 per year and Sue earns $100,000 a year. If a flat tax of 10 percent is imposed, Bob will pay _______ in taxes and Sue will pay_______ in taxes. This is an example of a _______ tax.

Correct AnswerverifiedShow Answer

Which term is defined as the logistical costs associated with implementing a tax?

Correct AnswerverifiedShow Answer

The table shown displays the marginal tax rates that correspond to each taxable income bracket for an individual. Consider two individuals: Griffin and Dalia. Griffin has $90,000 of taxable income and Dalia has $95,000 of taxable income. Which of the following statements is true?

Correct AnswerverifiedShow Answer

The graph shown depicts a tax being imposed, causing demand to shift from D1 to D2. The amount of the tax imposed is equal to:

Correct AnswerverifiedShow Answer

A tax will sometimes alter consumers' incentives. Which of the following statements about such a tax is true? This type of tax is meant to increase consumption. A tax designed to raise revenue may sometimes alter consumer incentives as a side effect. This type of tax is called a sin tax.

Correct AnswerverifiedShow Answer

Which of the following is not an example of a commonly tax-funded program?

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Considering a given increase in price due to a tax, the less price elastic the demand curve is, the:

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When a tax is imposed, the surplus that is lost to buyers and sellers but converted into tax revenue is:

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A proportional tax:

Correct AnswerverifiedShow Answer

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If the _ effect is greater than the _ effect, a tax cut will increase revenue.

Correct Answer
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Suppose Bob earns $20,000 per year and Sue earns $100,000 a year. If a flat tax of 10 percent is imposed, Bob will pay ___ in taxes and Sue will pay_ in taxes. This is an example of a _____ tax.

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