Question 1

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) None of the above
F) B) and C)

Question 2

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 D)
F) B) and C)

Question 3

The ability-to-pay principle of taxation:

Accepted Answer

A)   has been declared unconstitutional because it deprives individuals of property without due process of law.
B)   suggests that people should pay taxes in proportion to the benefits they derive from public goods and services.
C)   suggests that the tax burden should vary directly with people's income and wealth.
D)   suggests that the tax burden should vary inversely with people's income and wealth.E) All of the above
F) A) and B) C

Question 4

In which of the above market situations will the largest portion of an excise tax of a specified amount per unit of output be borne by producers?

Accepted Answer

A)   4
B)   3
C)   2
D)   1E) A) and D)
F) A) and B)

Question 5

Taxable income is:

Accepted Answer

A)   total income less deductions and exemptions.
B)   the same as gross income.
C)   the only income to which marginal tax rates apply.
D)   the sum of all wage and property income.E) C) and D)
F) None of the above

Question 6

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) B) and C)
F) A) and D)

Question 7

The equations for the demand and supply curves for a particular product are P = 10 - .4Q and P = 2 + .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 + .4Q.Government's revenue from this tax is:

Accepted Answer

A)   $750.
B)   $1500.
C)   $875.
D)   $800.E) A) and B)
F) C) and D)

Question 8

t is the supply curve after an excise tax is imposed.The burden of this tax is borne: A)  equally by consumers and producers. B)  most heavily by consumers. C)  most heavily by producers. D)  only by consumers." class="answers-bank-image d-inline" rel="preload" > Refer to the above figure in which S is the before-tax supply curve and St is the supply curve after an excise tax is imposed.The burden of this tax is borne:

Accepted Answer

A)   equally by consumers and producers.
B)   most heavily by consumers.
C)   most heavily by producers.
D)   only by consumers.E) All of the above
F) A) and C) B

Question 9

Overall,the U.S.tax system (combined federal,state,and local) is:

Accepted Answer

A)   highly progressive.
B)   slightly progressive.
C)   slightly regressive.
D)   highly regressive.E) B) and C)
F) A) and D)

Question 10

Assume the supply curve for product X is perfectly elastic and that government imposes a $2-per-unit excise tax.We can conclude that the resulting:

Accepted Answer

A)   increase in output will be greater the less elastic the demand curve.
B)   decrease in output will be greater the less elastic the demand curve.
C)   decrease in output will be greater the more elastic the demand curve.
D)   increase in output will be greater the more elastic the demand curve.E) A) and D)
F) A) and C)

Question 11

The three most important sources of federal tax revenue in order of descending importance are:

Accepted Answer

A)   sales,payroll,and personal income taxes.
B)   personal income,corporate income,and sales taxes.
C)   personal income,corporate income,and payroll taxes.
D)   personal income,payroll,and corporate income taxes.E) A) and D)
F) C) and D)

Question 12

The basic source of state government's revenue is the property tax.

Accepted Answer

A) True 
 B)False

Question 13

The average tax rate is:

Accepted Answer

A)   Change in taxes/Change in taxable income.
B)   Total taxes/Total taxable income.
C)   the sum of the marginal tax rate and the rate of transfer payments.
D)   the tax on incremental income less the tax on total income.E) A) and D)
F) None of the above B

Question 14

The tax rates embodied in the federal personal income tax are such that:

Accepted Answer

A)   a rising absolute amount,but a declining proportion,of income is paid in taxes.
B)   the marginal and average tax rates are equal,making the tax progressive.
C)   the average tax rate rises more rapidly than does the marginal tax rate.
D)   the marginal tax rate is higher than the average tax rate,causing the average tax rate to rise.E) A) and B)
F) All of the above

Question 15

Which of the following is correct?

Accepted Answer

A)   The federal tax system is regressive,while the state and local tax systems are progressive.
B)   Both the federal tax system and the state and local tax systems are regressive.
C)   The federal tax system is progressive,while the state and local tax systems are regressive.
D)   Both the federal tax system and the state and local tax systems are progressive.E) C) and D)
F) None of the above

Question 16

Refer to the above diagram,in which solid arrows reflect real flows and broken arrows are monetary flows.Flow (1) might represent:

Accepted Answer

A)   corporate income tax payments.
B)   government provision of highways for truck transportation.
C)   business property tax payments.
D)   transfer payments to low-income families.E) A) and B)
F) All of the above

Question 17

The federal income tax is consistent with the __________ principle of taxation,whereas an excise tax on sporting event tickets is consistent with the ___________ principle of taxation.

Accepted Answer

A)   benefits-received;ability-to-pay
B)   benefits-received;pay-as-you go
C)   ability-to-pay;benefits-received
D)   ability-to-pay;pay-as-you-goE) None of the above
F) All of the above

Question 18

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) None of the above
F) A) and D)

Question 19

In 2007,the top 1 percent of all taxpayers in the United States paid what percent of the federal income tax?

Accepted Answer

A)   21.2 percent
B)   33.7 percent
C)   39.5 percent
D)   60.7 percentE) All of the above
F) B) and D)

Question 20

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of demand for X is unitary (coefficient = 1) .If the incidence of the tax is such that the producers of X pay $1.75 of the tax and the consumers pay $.25,we can conclude that the:

Accepted Answer

A)   supply of X is highly inelastic.
B)   supply of X is highly elastic.
C)   demand for X is highly inelastic.
D)   demand for X is highly elastic.E) B) and C)
F) A) and D)

Exam 12: Public Finance: Expenditures and Taxes

Proprietary income refers to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The ability-to-pay principle of taxation:

Correct AnswerverifiedC

In which of the above market situations will the largest portion of an excise tax of a specified amount per unit of output be borne by producers?

Correct AnswerverifiedShow Answer

Taxable income is:

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 equations for the demand and supply curves for a particular product are P = 10 - .4Q and P = 2 + .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 + .4Q.Government's revenue from this tax is:

Correct AnswerverifiedShow Answer

Refer to the above figure in which S is the before-tax supply curve and St is the supply curve after an excise tax is imposed.The burden of this tax is borne:

Correct AnswerverifiedB

Overall,the U.S.tax system (combined federal,state,and local) is:

Correct AnswerverifiedShow Answer

Assume the supply curve for product X is perfectly elastic and that government imposes a $2-per-unit excise tax.We can conclude that the resulting:

Correct AnswerverifiedShow Answer

The three most important sources of federal tax revenue in order of descending importance are:

Correct AnswerverifiedShow Answer

The basic source of state government's revenue is the property tax.

Correct AnswerverifiedShow Answer

The average tax rate is:

Correct AnswerverifiedB

The tax rates embodied in the federal personal income tax are such that:

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Refer to the above diagram,in which solid arrows reflect real flows and broken arrows are monetary flows.Flow (1) might represent:

Correct AnswerverifiedShow Answer

The federal income tax is consistent with the __________ principle of taxation,whereas an excise tax on sporting event tickets is consistent with the ___________ principle of taxation.

Correct AnswerverifiedShow Answer

With respect to local finance:

Correct AnswerverifiedShow Answer

In 2007,the top 1 percent of all taxpayers in the United States paid what percent of the federal income tax?

Correct AnswerverifiedShow Answer

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of demand for X is unitary (coefficient = 1) .If the incidence of the tax is such that the producers of X pay $1.75 of the tax and the consumers pay $.25,we can conclude that the:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the above figure in which S is the before-tax supply curve and S_t is the supply curve after an excise tax is imposed.The burden of this tax is borne:

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The federal income tax is consistent with the principle of taxation,whereas an excise tax on sporting event tickets is consistent with the _ principle of taxation.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified