Question 1

The progressive structure of the income-tax system is based on the

Accepted Answer

A)   benefits-received principle.
B)   principle of diminishing returns.
C)   ability-to-pay principle.
D)   principle that "taxes are the price we pay for civilization."E) C) and D)
F) None of the above

Question 2

The greater the elasticity of demand and supply, the greater is the efficiency loss of a tax.

Accepted Answer

A) True 
 B)False

Question 3

The largest source of tax revenue for the U.S. federal government is

Accepted Answer

A)   personal income taxes.
B)   property taxes.
C)   corporate income taxes.
D)   sales and excise taxes.E) A) and C)
F) A) and D)

Question 4

When an excise tax or sales tax is imposed on a product, the sellers are always able to shift the burden of the tax on to the buyers.

Accepted Answer

A) True 
 B)False

Question 5

From 1960 to 2015, as percentages of U.S. output, government purchases have

Accepted Answer

A)   declined, but transfer payments have increased significantly.
B)   remained about the same, while transfer payments have increased slightly.
C)   increased sharply, but transfer payments have also decreased significantly.
D)   increased slightly, while transfer payments have remained about the same.E) B) and D)
F) B) and C)

Question 6

Which of the following statements about payroll taxes is false?

Accepted Answer

A)   They provide funds for Social Security.
B)   They include Medicare taxes.
C)   Both employers and employees pay these taxes.
D)   They are lump-sum taxes not based on wages/salaries.E) A) and B)
F) All of the above

Question 7

Approximately what percentage of the federal government's tax revenues are generated from personal income taxes (in 2015) ?

Accepted Answer

A)   75 percent
B)   28 percent
C)   33 percent
D)   47 percentE) A) and B)
F) A) and C)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Proprietary income refers to

Accepted Answer

A)   revenue flowing to the government from taxes.
B)   money borrowed by the government to finance its operations.
C)   revenue generated by government-run businesses.
D)   transfer payments from the government to the owners of property resources.E) A) and B)
F) A) and C)

Question 10

Given supply, the more inelastic the demand for a product, the larger the portion of an excise tax that is shifted to consumers.

Accepted Answer

A) True 
 B)False

Question 11

With respect to local finance,

Accepted Answer

A)   death and gift taxes are the major source of revenue and most expenditures are for hospitals and health services.
B)   the corporate income tax is the major source of revenue and natural resource development is the major type of expenditure.
C)   property taxes are the basic source of revenue and education is the major type of expenditure.
D)   sales and excise taxes are the major source of revenue and highway construction and maintenance is the major type of expenditure.E) A) and B)
F) A) and C)

Question 12

The Social Security tax is regressive because it applies only on income below a "cap" income level.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is correct about the U.S. tax system?

Accepted Answer

A)   The primary federal tax system is regressive, while the primary state and local tax systems are progressive.
B)   Both the primary federal tax system and the primary state and local tax systems are regressive.
C)   The primary federal tax system is progressive, while the primary state and local tax systems are regressive.
D)   Both the primary federal tax system and the primary state and local tax systems are progressive.E) A) and D)
F) C) and D)

Question 14

In determining one's personal income tax, taxable income is

Accepted Answer

A)   total income less deductions and exemptions.
B)   all income.
C)   all income other than wages and salaries.
D)   wage and salary income only.E) B) and D)
F) A) and D)

Question 15

Which of the following taxes is most likely to be regressive?

Accepted Answer

A)   personal income taxes
B)   corporate income taxes
C)   estate taxes
D)   general sales taxesE) B) and C)
F) A) and B)

Question 16

One difference between sales and excise taxes is that

Accepted Answer

A)   sales taxes are only applied at the state level, while excise taxes are only applied at the federal level.
B)   excise taxes apply to a wide range of products, while sales taxes apply only to a select list of products.
C)   sales taxes are calculated as a percentage of the price paid, while excise taxes are levied on a per-unit basis.
D)   excise taxes are calculated as a percentage of the price paid, while sales taxes are levied on a per-unit basis.E) A) and D)
F) A) and B)

Question 17

The largest source of tax revenue for state governments is the property tax.

Accepted Answer

A) True 
 B)False

Question 18

(Advanced analysis)  The equations for the demand and supply curves for a particular product are P = 10 − 0.4Q and P = 2 + 0.4Q, 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 + 0.4Q. Government's revenue from this tax is

Accepted Answer

A)   $750.
B)   $1,500.
C)   $875.
D)   $800.E) B) and D)
F) A) and B)

Question 19

Government purchases and transfer payments

Accepted Answer

A)   differ because the latter absorb resources while the former do not.
B)   differ because the former absorb resources while the latter do not.
C)   are alike because both are more inflationary than private spending.
D)   are alike because both absorb resources.E) All of the above
F) B) and D)

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 20: Public Finance: Expenditures and Taxes

In determining one's personal income tax, taxable income is

Correct Answer
verified

The progressive structure of the income-tax system is based on the

Correct Answer
verified

Government purchases and transfer payments

Correct Answer
verified

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

Correct Answer
verified

Approximately what percentage of the federal government's tax revenues are generated from personal income taxes (in 2015) ?

Correct Answer
verified

The largest source of tax revenue for state governments is the property tax.

Correct Answer
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The Social Security tax is regressive because it applies only on income below a "cap" income level.

Correct Answer
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When an excise tax or sales tax is imposed on a product, the sellers are always able to shift the burden of the tax on to the buyers.

Correct Answer
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Which of the following statements about payroll taxes is false?

Correct Answer
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Correct Answer
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From 1960 to 2015, as percentages of U.S. output, government purchases have

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

Correct Answer
verified

One difference between sales and excise taxes is that

Correct Answer
verified

The greater the elasticity of demand and supply, the greater is the efficiency loss of a tax.

Correct Answer
verified

With respect to local finance,

Correct Answer
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Which of the following is correct about the U.S. tax system?

Correct Answer
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The largest source of tax revenue for the U.S. federal government is

Correct Answer
verified

Given supply, the more inelastic the demand for a product, the larger the portion of an excise tax that is shifted to consumers.

Correct Answer
verified

Proprietary income refers to

Correct Answer
verified

Which of the following taxes is most likely to be regressive?

Correct Answer
verified

Exam 20: Public Finance: Expenditures and Taxes

In determining one's personal income tax, taxable income is

Correct AnswerverifiedShow Answer

The progressive structure of the income-tax system is based on the

Correct AnswerverifiedShow Answer

Government purchases and transfer payments

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Approximately what percentage of the federal government's tax revenues are generated from personal income taxes (in 2015) ?

Correct AnswerverifiedShow Answer

The largest source of tax revenue for state governments is the property tax.

Correct AnswerverifiedShow Answer

The Social Security tax is regressive because it applies only on income below a "cap" income level.

Correct AnswerverifiedShow Answer

When an excise tax or sales tax is imposed on a product, the sellers are always able to shift the burden of the tax on to the buyers.

Correct AnswerverifiedShow Answer

Which of the following statements about payroll taxes is false?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

From 1960 to 2015, as percentages of U.S. output, government purchases have

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

One difference between sales and excise taxes is that

Correct AnswerverifiedShow Answer

The greater the elasticity of demand and supply, the greater is the efficiency loss of a tax.

Correct AnswerverifiedShow Answer

With respect to local finance,

Correct AnswerverifiedShow Answer

Which of the following is correct about the U.S. tax system?

Correct AnswerverifiedShow Answer

The largest source of tax revenue for the U.S. federal government is

Correct AnswerverifiedShow Answer

Given supply, the more inelastic the demand for a product, the larger the portion of an excise tax that is shifted to consumers.

Correct AnswerverifiedShow Answer

Proprietary income refers to

Correct AnswerverifiedShow Answer

Which of the following taxes is most likely to be regressive?

Correct AnswerverifiedShow Answer

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