Question 1

Which of the following is the largest expenditure item of local governments?

Accepted Answer

A)  highways
B)  welfare
C)  education
D)  public safetyE) A) and D)
F) A) and B)

Question 2

The tax revenues of local governments are typically

Accepted Answer

A)  more than their expenditures.
B)  equal to their expenditures.
C)  slightly less than their expenditures.
D)  less than one-half of their expenditures.E) A) and B)
F) A) and C)

Question 3

A tax is regressive if it

Accepted Answer

A)  takes a higher percentage of income as income increases.
B)  takes the same percentage of income regardless of income level.
C)  takes a smaller percentage of income as income increases.
D)  is levied on consumers.E) A) and D)
F) None of the above

Question 4

Total governmental purchases-federal, state, and local combined-accounted for about what percentage of domestic output in 2018?

Accepted Answer

A)  32 percent
B)  18 percent
C)  14 percent
D)  5 percentE) B) and C)
F) A) and B)

Question 5

(Advanced analysis) The equations for the demand and supply curves for a particular product are P = 10 − 0.4 Q and P = 1 + 0.4 Q, where P is price and Q is quantity expressed in units of 100. After an excise tax is imposed on the product, the supply equation is P = 2 + 0.4 Q. The efficiency loss of this tax is

Accepted Answer

A)  $62.50.
B)  $125.
C)  $87.50.
D)  $1.00.E) B) and C)
F) All of the above

Question 6

The so-called Tax Freedom Day of each year recognizes the day that

Accepted Answer

A)  the federal government requires taxpayers to submit their taxes to the Internal Revenue Service.
B)  charitable contributions were made legal under the tax codes of the United States government.
C)  the U.S. Supreme Court ruled that double taxation of income was illegal for corporations and businesses.
D)  the average worker had earned enough income to pay his or her share of government spending for that year.E) A) and B)
F) A) and C)

Question 7

The property tax may be regressive even though wealthy people own much more taxable property than do poor people. This possibility arises because

Accepted Answer

A)  marginal and average tax rates on property tend to converge.
B)  wealthy people can evade property taxes, while poor people cannot.
C)  property taxes on rental property and business property are shifted.
D)  statutory property tax rates decline as the value of property rises.E) None of the above
F) B) and C)

Question 8

Using income as the tax base, which of the following best illustrates a regressive tax?

Accepted Answer

A)  the federal inheritance tax
B)  a 7 percent general sales tax
C)  the corporate income tax
D)  the personal income taxE) All of the above
F) C) and D)

Question 9

The addition of government to the circular-flow model illustrates that government

Accepted Answer

A)  purchases resources in the resource market.
B)  provides services to businesses and households.
C)  purchases goods in the product market.
D)  does all of the things stated in the other possible answers.E) A) and B)
F) None of the above

Question 10

(Advanced analysis) The equations for the demand and supply curves for a particular product are P = 10 − 0.4 Q and P = 2 + 0.4 Q, where P is price and Q is quantity expressed in units of 100. After an excise tax is imposed on the product, the supply equation is P = 3 + 0.4 Q. The excise tax on each unit of the product

Accepted Answer

A)  is $1.
B)  is $2.
C)  is $3.
D)  cannot be determined with the information given.E) B) and D)
F) B) and C)

Question 11

The table contains five tax schedules for an economy. All figures are in billions of dollars. Which of the schedules represent(s) a progressive tax?

Accepted Answer

A)  V only
B)  III and V
C)  II and III
D)  III onlyE) A) and B)
F) All of the above

Question 12

Which of the following is not an important source of revenue for the federal government?

Accepted Answer

A)  corporate income taxes
B)  property taxes
C)  payroll taxes
D)  personal income taxesE) B) and C)
F) None of the above

Question 13

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) All of the above
F) A) and D)

Question 14

Describe how the federal government functions within the circular flow model.

Accepted Answer

Government buys products from the produc...

Question 15

The government is like business firms in that it provides goods and services to households and businesses.

Accepted Answer

A) True 
 B)False

Question 16

In economics, the "public sector" refers to the

Accepted Answer

A)  general public.
B)  consuming public as well as businesses.
C)  federal, state, and local government.
D)  publicly owned corporations.E) A) and D)
F) A) and C)

Question 17

A highly progressive tax takes relatively more from the rich than it does from the poor.

Accepted Answer

A) True 
 B)False

Question 18

Other things being equal, the burden of a sales tax on a product will be borne entirely by the producer if

Accepted Answer

A)  demand is perfectly elastic.
B)  supply is perfectly elastic.
C)  supply and demand have the same price elasticity.
D)  demand is perfectly inelastic.E) None of the above
F) All of the above

Question 19

The table represents a personal income tax schedule. The average tax rate at the $60,000 level of income is

Accepted Answer

A)  10.0 percent.
B)  11.6 percent.
C)  15.0 percent.
D)  20.8 percent.E) A) and B)
F) A) and C)

Question 20

The largest portion of federal employees work in the national defense sector.

Accepted Answer

A) True 
 B)False

Exam 20: Public Finance: Expenditures and Taxes

In economics, the "public sector" refers to the

Correct Answer
verified

Total governmental purchases-federal, state, and local combined-accounted for about what percentage of domestic output in 2018?

Correct Answer
verified

The table represents a personal income tax schedule. The average tax rate at the $60,000 level of income is

Correct Answer
verified

Correct Answer
verified

Describe how the federal government functions within the circular flow model.

Correct Answer
verified
Government buys products from the produc...
View Answer

The tax revenues of local governments are typically

Correct Answer
verified

The so-called Tax Freedom Day of each year recognizes the day that

Correct Answer
verified

Other things being equal, the burden of a sales tax on a product will be borne entirely by the producer if

Correct Answer
verified

Which of the following is not an important source of revenue for the federal government?

Correct Answer
verified

Using income as the tax base, which of the following best illustrates a regressive tax?

Correct Answer
verified

Correct Answer
verified

The property tax may be regressive even though wealthy people own much more taxable property than do poor people. This possibility arises because

Correct Answer
verified

The efficiency loss of a tax is the idea that

Correct Answer
verified

The government is like business firms in that it provides goods and services to households and businesses.

Correct Answer
verified

The addition of government to the circular-flow model illustrates that government

Correct Answer
verified

The table contains five tax schedules for an economy. All figures are in billions of dollars. Which of the schedules represent(s) a progressive tax?

Correct Answer
verified

Which of the following is the largest expenditure item of local governments?

Correct Answer
verified

A tax is regressive if it

Correct Answer
verified

A highly progressive tax takes relatively more from the rich than it does from the poor.

Correct Answer
verified

The largest portion of federal employees work in the national defense sector.

Correct Answer
verified

Exam 20: Public Finance: Expenditures and Taxes

In economics, the "public sector" refers to the

Correct AnswerverifiedShow Answer

Total governmental purchases-federal, state, and local combined-accounted for about what percentage of domestic output in 2018?

Correct AnswerverifiedShow Answer

The table represents a personal income tax schedule. The average tax rate at the $60,000 level of income is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Describe how the federal government functions within the circular flow model.

Correct AnswerverifiedGovernment buys products from the produc...View AnswerShow Answer

The tax revenues of local governments are typically

Correct AnswerverifiedShow Answer

The so-called Tax Freedom Day of each year recognizes the day that

Correct AnswerverifiedShow Answer

Other things being equal, the burden of a sales tax on a product will be borne entirely by the producer if

Correct AnswerverifiedShow Answer

Which of the following is not an important source of revenue for the federal government?

Correct AnswerverifiedShow Answer

Using income as the tax base, which of the following best illustrates a regressive tax?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The property tax may be regressive even though wealthy people own much more taxable property than do poor people. This possibility arises because

Correct AnswerverifiedShow Answer

The efficiency loss of a tax is the idea that

Correct AnswerverifiedShow Answer

The government is like business firms in that it provides goods and services to households and businesses.

Correct AnswerverifiedShow Answer

The addition of government to the circular-flow model illustrates that government

Correct AnswerverifiedShow Answer

The table contains five tax schedules for an economy. All figures are in billions of dollars. Which of the schedules represent(s) a progressive tax?

Correct AnswerverifiedShow Answer

Which of the following is the largest expenditure item of local governments?

Correct AnswerverifiedShow Answer

A tax is regressive if it

Correct AnswerverifiedShow Answer

A highly progressive tax takes relatively more from the rich than it does from the poor.

Correct AnswerverifiedShow Answer

The largest portion of federal employees work in the national defense sector.

Correct AnswerverifiedShow Answer

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Government buys products from the produc...
View Answer

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