Question 1

The effort to collect and manage revenue from taxes is called:

Accepted Answer

A)   an externality.
B)   deadweight loss.
C)   administrative burden.
D)   transfer of surplus.E) C) and D)
F) A) and B)

Question 2

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 3

One cost associated with the imposition of taxes is:

Accepted Answer

A)   deadweight loss.
B)   scarcity.
C)   shortages.
D)   overconsumption.E) B) and D)
F) B) and C)

Question 4

If the ________ effect is greater than the ___________ effect,a tax cut will increase revenues.

Accepted Answer

A)   price; quantity
B)   quantity; income
C)   income; price
D)   quantity; priceE) A) and B)
F) A) and C)

Question 5

Policymakers have the ability to affect:

Accepted Answer

A)   the economic incidence of a tax burden on the buyer and seller.
B)   the relative economic incidence of the tax burden on the rich and the poor.
C)   whether the buyer or seller will bear the actual burden of the tax.
D)   how the tax is shared between buyer and seller.E) B) and C)
F) A) and D)

Question 6

The difference between the loss of surplus to taxpayers and the tax revenue collected is called:

Accepted Answer

A)   an externality.
B)   deadweight loss.
C)   consumer surplus.
D)   producer surplus.E) C) and D)
F) B) and D)

Question 7

When tax rates fall,people tend to:

Accepted Answer

A)   increase the amount they work a great deal.
B)   hardly increase the amount they work.
C)   hardly decrease the amount they work.
D)   decrease the amount they work, although to what degree is still being researched.E) A) and B)
F) A) and C)

Question 8

A tax in an efficient market:

Accepted Answer

A)   increases efficiency.
B)   decreases total surplus.
C)   maximizes total surplus.
D)   often fails to generate revenue.E) A) and C)
F) A) and B)

Question 9

When a tax is present in a market,the price paid by consumers:

Accepted Answer

A)   equals that received by suppliers, but it is higher than the market price in the absence of taxes.
B)   is greater than that received by suppliers.
C)   is less than that received by suppliers.
D)   equals that received by suppliers, but it is lower than the market price in the absence of taxes.E) A) and D)
F) A) and C)

Question 10

Taxes change behavior for all of the following reasons except they:

Accepted Answer

A)   alter the incentives faced by market participants.
B)   drive a wedge between the price paid by buyers and the price received by sellers.
C)   result in a lower equilibrium quantity of the good or service being consumed.
D)   increase consumer and producer surplus experienced at market.E) All of the above
F) B) and C)

Question 11

One reason governments impose taxes is to:

Accepted Answer

A)   raise government revenues.
B)   increase consumer spending.
C)   spur economic growth.
D)   encourage more production.E) B) and C)
F) A) and D)

Question 12

Higher income countries tend to collect _____________ as a percentage of their GDP than do low-income countries.

Accepted Answer

A)   greater tax revenues
B)   smaller tax revenues
C)   about the same in tax revenues
D)   There is really no correlation between a country's wealth and the tax revenues it generates.E) B) and C)
F) All of the above

Question 13

A flat tax:

Accepted Answer

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

Question 14

The payroll tax and the income tax differ in that:

Accepted Answer

A)   the employer pays the payroll tax, and the individual pays the income tax.
B)   the payroll tax is tied directly to specific programs while the personal income tax goes toward general government revenue.
C)   employers have to pay both payroll and corporate income taxes, and individuals only have to pay personal income tax.
D)   the employer pays the payroll tax, but the income tax burden is shared between employer and employee.E) B) and C)
F) A) and B)

Question 15

When a tax is imposed,some of the lost surplus becomes tax revenues and the rest is:

Accepted Answer

A)   transferred to consumers.
B)   transferred to producers.
C)   transferred to recipients of government services.
D)   simply lost.E) A) and D)
F) All of the above

Question 16

How much deadweight loss a tax causes is primarily determined by:

Accepted Answer

A)   how responsive buyers and sellers are to a price change.
B)   how much tax revenue the government generates.
C)   whether the tax is imposed on the buyer or seller.
D)   the ability of the government to impose the tax.E) A) and B)
F) A) and C)

Question 17

A lump-sum tax:

Accepted Answer

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

Question 18

It is difficult to balance the budget every year because:

Accepted Answer

A)   political battles often cause blatant deficit spending that could be avoided.
B)   while economic downturns are easy to predict, booms are not.
C)   it is hard to get agreement on how to spend discretionary funds.
D)   it is unlikely that revenues will exactly equal planned expenditures in any given year.E) B) and C)
F) None of the above

Question 19

The _____________ tells us when the government raises taxes,it gets more revenue per unit sold.

Accepted Answer

A)   quantity effect
B)   income effect
C)   price effect
D)   substitution effectE) A) and C)
F) A) and D)

Question 20

The two sources that contribute roughly 80 percent together of total tax revenues are:

Accepted Answer

A)   personal income tax and payroll tax.
B)   personal income tax and corporate income tax.
C)   corporate income tax and payroll tax.
D)   personal income tax and excise tax.E) None of the above
F) A) and B)

Exam 20: Taxation and the Public Budget

Higher income countries tend to collect _____________ as a percentage of their GDP than do low-income countries.

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A lump-sum tax:

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When tax rates fall,people tend to:

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The payroll tax and the income tax differ in that:

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A tax in an efficient market:

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How much deadweight loss a tax causes is primarily determined by:

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One reason governments impose taxes is to:

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The _____________ tells us when the government raises taxes,it gets more revenue per unit sold.

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One cost associated with the imposition of taxes is:

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A flat tax:

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The two sources that contribute roughly 80 percent together of total tax revenues are:

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If the ________ effect is greater than the ___________ effect,a tax cut will increase revenues.

Correct AnswerverifiedShow Answer

The difference between the loss of surplus to taxpayers and the tax revenue collected is called:

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When a tax is present in a market,the price paid by consumers:

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Taxes change behavior for all of the following reasons except they:

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When a tax is imposed,some of the lost surplus becomes tax revenues and the rest is:

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Policymakers have the ability to affect:

Correct AnswerverifiedShow Answer

The effort to collect and manage revenue from taxes is called:

Correct AnswerverifiedShow Answer

It is difficult to balance the budget every year because:

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

Correct AnswerverifiedShow Answer

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If the effect is greater than the ___ effect,a tax cut will increase revenues.

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