Question 1

A sales tax is a tax on the:

Accepted Answer

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

Question 2

FICA,the tax that supports Medicare and Social Security,is generally:

Accepted Answer

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

Question 3

The __________ tells us when the government raises taxes,the higher tax rate causes fewer units to be sold.

Accepted Answer

A)   quantity effect
B)   price effect
C)   government spending effect
D)   quality effectE) None of the above
F) C) and D)

Question 4

The federal income tax _____________ compared to 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) A) and D)

Question 5

If Bob earns $20,000 a year and pays $2,000 in taxes,and Cindy earns $40,000 a year and pays $4,000 in taxes,then Bob's tax rate is _______ and Cindy's tax rate is_____.

Accepted Answer

A)   5%, 10%
B)   2%, 4%
C)   10%, 10%
D)   20%, 10%E) B) and C)
F) A) and C)

Question 6

One of the primary aims of taxation is:

Accepted Answer

A)   to increase government revenues.
B)   to reduce the equilibrium quantity.
C)   to alter the incentives of market participants.
D)   All of these are primary goals of taxation.E) B) and C)
F) All of the above

Question 7

The third largest source of government tax revenues that contributes roughly 10 percent to total revenues is:

Accepted Answer

A)   payroll tax.
B)   personal income tax.
C)   corporate income tax.
D)   excise tax.E) A) and B)
F) A) and C)

Question 8

During a time of an economic downturn,it is likely that projected tax revenues will be __________ than anticipated,and expenditures will be _______ than anticipated.

Accepted Answer

A)   higher; higher
B)   lower; lower
C)   lower; higher
D)   higher; lowerE) A) and B)
F) A) and C)

Question 9

All taxes carry which of the following costs?

Accepted Answer

A)   Time in creating procedures for collecting revenues
B)   Enforcing tax payments
C)   Managing collected funds
D)   All taxes incur all of these costs.E) All of the above
F) A) and C)

Question 10

We can describe who bears the burden of a tax by using the concept of:

Accepted Answer

A)   marginal burden.
B)   incidence.
C)   payee.
D)   marginal tax rate.E) None of the above
F) A) and B)

Question 11

When policy makers are deciding where to place the statutory incidence of a tax,it is helpful to remember that:

Accepted Answer

A)   it will have no effect on the economic incidence of the tax.
B)   the economic incidence will fall to the more-elastic party.
C)   it will largely determine the economic incidence of the tax.
D)   it will have a large impact on efficiency of the tax.E) A) and B)
F) A) and C)

Question 12

When considering different tax levels,the revenue-maximizing point will be reached more:

Accepted Answer

A)   slowly when demand is more elastic.
B)   quickly when demand is more elastic.
C)   quickly when demand is less elastic.
D)   quickly if demand is unit elastic.E) C) and D)
F) A) and C)

Question 13

The idea that people change their behavior in response to taxes is

Accepted Answer

A)   highly controversial among economists.
B)   accepted by economists, but debated by those in Congress.
C)   uncontroversial among economists.
D)   None of these statements is true.E) A) and B)
F) A) and C)

Question 14

If Janice earns $50,000 a year and pays $500 in taxes,and Cam earns $100,000 a year and pays $20,000 in taxes,the tax system must be:

Accepted Answer

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

Question 15

In general,the more complex the tax the:

Accepted Answer

A)   more tax revenues it will generate.
B)   more efficient it will be.
C)   higher the administrative burden will be.
D)   more deadweight loss it will create.E) None of the above
F) B) and C)

Question 16

The federal debt is ____________ and the federal deficit is ______________.

Accepted Answer

A)   the cumulative total of what the federal government owes; the amount the federal government overspent in a given year
B)   the amount the federal government overspent in a year; the cumulative total of what the federal government owes
C)   the total of what is projected to be spent in a given year; the total of what is projected to be earned in revenues in a given year
D)   None of these statements is true.E) A) and B)
F) A) and C)

Question 17

To calculate tax revenue:

Accepted Answer

A)   divide total revenues by the tax per unit.
B)   multiply total revenues by the tax per unit.
C)   multiply the tax per unit by the number of units of the item being taxed.
D)   multiply the tax per unit by the price of the unit being taxed.E) None of the above
F) B) and C)

Question 18

An example of a tax specifically designed to reduce consumption of a good is a tax on:

Accepted Answer

A)   chocolate.
B)   cigarettes.
C)   coffee.
D)   automobiles.E) C) and D)
F) None of the above

Question 19

Most research suggests that the elasticity of the labor supply with respect to taxes is:

Accepted Answer

A)   very low for most people.
B)   very high for most people.
C)   highly variable across people.
D)   unpredictable in most settings.E) None of the above
F) A) and B)

Question 20

The taxes used to pay for Social Security and Medicare are:

Accepted Answer

A)   income taxes.
B)   sales taxes.
C)   corporate income taxes.
D)   payroll taxes.E) All of the above
F) A) and D)

Exam 20: Taxation and the Public Budget

The idea that people change their behavior in response to taxes is

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A sales tax is a tax on the:

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When policy makers are deciding where to place the statutory incidence of a tax,it is helpful to remember that:

Correct AnswerverifiedShow Answer

We can describe who bears the burden of a tax by using the concept of:

Correct AnswerverifiedShow Answer

In general,the more complex the tax the:

Correct AnswerverifiedShow Answer

The taxes used to pay for Social Security and Medicare are:

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An example of a tax specifically designed to reduce consumption of a good is a tax on:

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The federal debt is ____________ and the federal deficit is ______________.

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During a time of an economic downturn,it is likely that projected tax revenues will be __________ than anticipated,and expenditures will be _______ than anticipated.

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The federal income tax _____________ compared to a state sales tax.

Correct AnswerverifiedShow Answer

One of the primary aims of taxation is:

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The third largest source of government tax revenues that contributes roughly 10 percent to total revenues is:

Correct AnswerverifiedShow Answer

Most research suggests that the elasticity of the labor supply with respect to taxes is:

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When considering different tax levels,the revenue-maximizing point will be reached more:

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To calculate tax revenue:

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If Bob earns $20,000 a year and pays $2,000 in taxes,and Cindy earns $40,000 a year and pays $4,000 in taxes,then Bob's tax rate is _______ and Cindy's tax rate is_____.

Correct AnswerverifiedShow Answer

FICA,the tax that supports Medicare and Social Security,is generally:

Correct AnswerverifiedShow Answer

The __________ tells us when the government raises taxes,the higher tax rate causes fewer units to be sold.

Correct AnswerverifiedShow Answer

All taxes carry which of the following costs?

Correct AnswerverifiedShow Answer

If Janice earns $50,000 a year and pays $500 in taxes,and Cam earns $100,000 a year and pays $20,000 in taxes,the tax system must be:

Correct AnswerverifiedShow Answer

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The federal debt is and the federal deficit is __.

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During a time of an economic downturn,it is likely that projected tax revenues will be ____ than anticipated,and expenditures will be _ than anticipated.

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If Bob earns $20,000 a year and pays $2,000 in taxes,and Cindy earns $40,000 a year and pays $4,000 in taxes,then Bob's tax rate is ___ and Cindy's tax rate is_.

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