Question 1

Refer to the above diagram,in which solid arrows reflect real flows and broken arrows are monetary flows.Flow (2) might represent:

Accepted Answer

A)   the provision of national defense by government.
B)   a government subsidy to farmers.
C)   corporate income tax payments.
D)   welfare payments to low-income families.E) None of the above
F) A) and B)

Question 2

(Applying the Analysis) Proponents of a value-added tax (VAT) claim that a VAT:

Accepted Answer

A)   is progressive,leading to a more equitable distribution of income.
B)   equalizes the tax burden between buyers and sellers of goods.
C)   is proportional,so all income groups pay a fair share.
D)   penalizes consumption and encourages savings and investment.E) B) and C)
F) None of the above

Question 3

About two-thirds of all federal spending is for national defense.

Accepted Answer

A) True 
 B)False

Question 4

Assume the Environmental Protection Agency imposes an excise tax on polluting firms.In which of the following situations would we expect the additional costs to be borne most heavily by consumers?

Accepted Answer

A)   Demand is highly elastic and supply is highly inelastic.
B)   Demand and supply are both highly elastic.
C)   Demand and supply are both highly inelastic.
D)   Demand is highly inelastic and supply is highly elastic.E) B) and D)
F) C) and D)

Question 5

The basic tax rate on taxable corporate income is:

Accepted Answer

A)   15 percent.
B)   22 percent.
C)   35 percent.
D)   52 percent.E) All of the above
F) A) and C)

Question 6

Assume you pay a tax of $4000 on a taxable income of $24,000.If your taxable income were $30,000,your tax payment would be $5000.This tax structure is:

Accepted Answer

A)   progressive.
B)   proportional.
C)   regressive.
D)   discriminatory.The tax rate at $24,000 income is $4000/$24,000 = 0.167 and the tax rate at $30,000 income is $5000/$30,000 = 0.167,so the tax rate is proportional.E) C) and D)
F) None of the above

Question 7

In which of the above market situations will the efficiency loss of an excise tax be the greatest?

Accepted Answer

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

Question 8

Refer to the above data.If government levies a per-unit excise tax of $1 on suppliers of this product,equilibrium price and quantity will be:

Accepted Answer

A)   $9 and 3,000.
B)   $7.50 and 2,250.
C)   $8.50 and 2,250.
D)   $7 and 3,000.E) B) and C)
F) All of the above

Question 9

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of supply of X is unitary (coefficient = 1) .If the incidence of the tax is such that the producers of X pay $1.90 of the tax and the consumers pay $.10,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) All of the above
F) B) and D)

Question 10

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

Accepted Answer

A)   5 percent
B)   10 percent
C)   20 percent
D)   40 percentE) None of the above
F) A) and C)

Question 11

Sales and excise taxes are levied on retailers,but retailers add these taxes to the prices of their products.This illustrates the:

Accepted Answer

A)   equal sacrifice theory of taxation.
B)   shifting of taxes to consumers.
C)   ability-to-pay principle of taxation.
D)   benefits-received principle of taxation.E) None of the above
F) A) and C)

Question 12

Refer to the above diagram,in which solid arrows reflect real flows and broken arrows are monetary flows.Flow (7) might represent:

Accepted Answer

A)   a transfer payment to disabled persons.
B)   wage payments to public school teachers.
C)   subsidies to corporations to stimulate exports.
D)   the U.S.Bureau of Engraving and Printing's expenditures for paper.E) All of the above
F) A) and C)

Question 13

The benefits-received principle of taxation is used to support corporate and personal income taxes.

Accepted Answer

A) True 
 B)False

Question 14

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.The equilibrium quantity after the excise tax is imposed is:

Accepted Answer

A)   750 units.
B)   850 units.
C)   875 units.
D)   950 units.E) A) and B)
F) C) and D)

Question 15

Transfer payments are about ____ of U.S.domestic output (as of 2010) .

Accepted Answer

A)   8 percent
B)   15 percent
C)   25 percent
D)   35 percentE) A) and C)
F) A) and B)

Question 16

At the state and local levels of government in the United States,the majority of government employees work in which area?

Accepted Answer

A)   Postal Service
B)   Education
C)   Hospitals and other health care
D)   Police and correctionsE) C) and D)
F) A) and B)

Question 17

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 these.E) A) and C)
F) C) and D)

Question 18

The marginal tax rate is:

Accepted Answer

A)   the difference between the total tax rate and the average tax rate.
B)   the percentage of total income paid as taxes.
C)   Change in taxes/Change in taxable income.
D)   Total taxes/Total taxable income.E) A) and B)
F) B) and D)

Question 19

Refer to the above diagram,in which solid arrows reflect real flows and broken arrows are monetary flows.Flow (5) might represent:

Accepted Answer

A)   personal income tax revenues.
B)   the provision of public schools by local governments.
C)   the purchase of laptop computers by the State of Iowa.
D)   transfer payments to unemployed workers.E) None of the above
F) B) and C)

Question 20

Approximately what percentage of the U.S.labor force works for the government at either the federal,state,or local level?

Accepted Answer

A)   7 percent
B)   10 percent
C)   13 percent
D)   19 percentE) B) and D)
F) All of the above

Exam 12: Public Finance: Expenditures and Taxes

Assume you pay a tax of $4000 on a taxable income of $24,000.If your taxable income were $30,000,your tax payment would be $5000.This tax structure is:

Correct Answer
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Approximately what percentage of the U.S.labor force works for the government at either the federal,state,or local level?

Correct Answer
verified

The benefits-received principle of taxation is used to support corporate and personal income taxes.

Correct Answer
verified

At the state and local levels of government in the United States,the majority of government employees work in which area?

Correct Answer
verified

Refer to the above diagram,in which solid arrows reflect real flows and broken arrows are monetary flows.Flow (2) might represent:

Correct Answer
verified

Refer to the above diagram,in which solid arrows reflect real flows and broken arrows are monetary flows.Flow (7) might represent:

Correct Answer
verified

In which of the above market situations will the efficiency loss of an excise tax be the greatest?

Correct Answer
verified

Refer to the above data.If government levies a per-unit excise tax of $1 on suppliers of this product,equilibrium price and quantity will be:

Correct Answer
verified

The marginal tax rate is:

Correct Answer
verified

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

Correct Answer
verified

(Applying the Analysis) Proponents of a value-added tax (VAT) claim that a VAT:

Correct Answer
verified

Refer to the above diagram,in which solid arrows reflect real flows and broken arrows are monetary flows.Flow (5) might represent:

Correct Answer
verified

About two-thirds of all federal spending is for national defense.

Correct Answer
verified

Sales and excise taxes are levied on retailers,but retailers add these taxes to the prices of their products.This illustrates the:

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of supply of X is unitary (coefficient = 1) .If the incidence of the tax is such that the producers of X pay $1.90 of the tax and the consumers pay $.10,we can conclude that the:

Correct Answer
verified

Transfer payments are about ____ of U.S.domestic output (as of 2010) .

Correct Answer
verified

Assume the Environmental Protection Agency imposes an excise tax on polluting firms.In which of the following situations would we expect the additional costs to be borne most heavily by consumers?

Correct Answer
verified

The basic tax rate on taxable corporate income is:

Correct Answer
verified

Exam 12: Public Finance: Expenditures and Taxes

Assume you pay a tax of $4000 on a taxable income of $24,000.If your taxable income were $30,000,your tax payment would be $5000.This tax structure is:

Correct AnswerverifiedShow Answer

Approximately what percentage of the U.S.labor force works for the government at either the federal,state,or local level?

Correct AnswerverifiedShow Answer

The benefits-received principle of taxation is used to support corporate and personal income taxes.

Correct AnswerverifiedShow Answer

At the state and local levels of government in the United States,the majority of government employees work in which area?

Correct AnswerverifiedShow Answer

Refer to the above diagram,in which solid arrows reflect real flows and broken arrows are monetary flows.Flow (2) might represent:

Correct AnswerverifiedShow Answer

Refer to the above diagram,in which solid arrows reflect real flows and broken arrows are monetary flows.Flow (7) might represent:

Correct AnswerverifiedShow Answer

In which of the above market situations will the efficiency loss of an excise tax be the greatest?

Correct AnswerverifiedShow Answer

Refer to the above data.If government levies a per-unit excise tax of $1 on suppliers of this product,equilibrium price and quantity will be:

Correct AnswerverifiedShow Answer

The marginal tax rate is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

(Applying the Analysis) Proponents of a value-added tax (VAT) claim that a VAT:

Correct AnswerverifiedShow Answer

Refer to the above diagram,in which solid arrows reflect real flows and broken arrows are monetary flows.Flow (5) might represent:

Correct AnswerverifiedShow Answer

About two-thirds of all federal spending is for national defense.

Correct AnswerverifiedShow Answer

Sales and excise taxes are levied on retailers,but retailers add these taxes to the prices of their products.This illustrates the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of supply of X is unitary (coefficient = 1) .If the incidence of the tax is such that the producers of X pay $1.90 of the tax and the consumers pay $.10,we can conclude that the:

Correct AnswerverifiedShow Answer

Transfer payments are about ____ of U.S.domestic output (as of 2010) .

Correct AnswerverifiedShow Answer

Assume the Environmental Protection Agency imposes an excise tax on polluting firms.In which of the following situations would we expect the additional costs to be borne most heavily by consumers?

Correct AnswerverifiedShow Answer

The basic tax rate on taxable corporate income is:

Correct AnswerverifiedShow Answer

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