Question 1

The tax that is most difficult to shift to others would be

Accepted Answer

A)   the personal income tax.
B)   the corporate income tax.
C)   specific excise taxes.
D)   business property taxes.E) C) and D)
F) B) and D)

Question 2

(Consider This)  Payout rates for state lotteries

Accepted Answer

A)   are considerably lower than payout rates from casinos.
B)   are considerably higher than payout rates from casinos.
C)   are roughly equal to the payout rates from casinos.
D)   cannot be compared with casino payout rates because states do not typically disclose their payout rates.E) None of the above
F) A) and B)

Question 3

In economics, the "public sector" refers to the

Accepted Answer

A)   general public.
B)   consuming public as well as businesses.
C)   federal, state, and local government.
D)   publicly owned corporations.E) B) and D)
F) A) and D)

Question 4

At the state and local levels of the U.S. government, a majority of government employees work in which of the following areas?

Accepted Answer

A)   postal service
B)   education
C)   hospitals and other health care
D)   police and correctionsE) B) and D)
F) C) and D) B

Question 5

The levying of licensing fees for automobiles is an example of taxation based on the ability-to-pay principle.

Accepted Answer

A) True 
 B)False

Question 6

The main difference between sales and excise taxes is that

Accepted Answer

A)   sales taxes apply to a wide range of products, while excise taxes apply only to a select group of products.
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 consumption taxes, while excise taxes are not.
D)   excise taxes are consumption taxes, while sales taxes are not.E) None of the above
F) A) and D)

Question 7

Joe complains that 32 percent of his income last year went to taxes. He is referring to his

Accepted Answer

A)   average tax rate.
B)   marginal tax rate.
C)   proportional tax rate.
D)   progressive tax rate.E) None of the above
F) A) and C)

Question 8

A tax is progressive if the average tax rate rises as income increases.

Accepted Answer

A) True 
 B)False

Question 9

The major expenditure of local governments is for education.

Accepted Answer

A) True 
 B)False  True

Question 10

According to data compiled by the Bureau of Economic Analysis, from 1960 to 2015, government transfer payments as a percentage of U.S. output have

Accepted Answer

A)   decreased as a result of improvements in private pension and health insurance plans.
B)   increased slightly at about the same rate as population.
C)   tripled as a percentage of output.
D)   remained approximately constant.E) A) and B)
F) A) and C)

Question 11

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 12

If a tax is progressive, then

Accepted Answer

A)   the average and marginal tax rates are always equal.
B)   as the tax base increases, the marginal tax rate declines.
C)   as the tax base rises, the average tax rate is greater than the marginal tax rate.
D)   as the tax base increases, the marginal tax rate is greater than the average tax rate.E) C) and D)
F) B) and D)

Question 13

Assume that in year 1 your average tax rate is 20 percent on a taxable income of $20,000. If the marginal tax rate on the next $10,000 of taxable income is 30 percent, what will be the average tax rate if your taxable income rises to $30,000?

Accepted Answer

A)   7 percent
B)   30 percent
C)   about 16 percent
D)   about 23 percentE) All of the above
F) B) and D)

Question 14

Which generalization is incorrect?

Accepted Answer

A)   Given supply, the more elastic the demand for a product, the larger is the portion of an excise tax that is shifted forward to consumers.
B)   Given demand, the more elastic the supply of a product, the larger is the portion of an excise tax that is borne by producers.
C)   Given supply, the more elastic the demand for a product, the larger is the portion of an excise tax that is borne by the sellers.
D)   Given demand, the less elastic the supply of a product, the larger is the portion of an excise tax that is shifted forward to consumers.E) C) and D)
F) None of the above C

Question 15

Payroll taxes account for more than one-third of federal tax revenues.

Accepted Answer

A) True 
 B)False

Question 16

A progressive tax is such that

Accepted Answer

A)   tax rates are higher the greater one's income.
B)   the same tax rate applies to all income receivers, so that the rich pay absolutely more taxes than the poor.
C)   entrepreneurial income is exempt from taxation.
D)   the revenues it yields are spent on transfer payments.E) C) and D)
F) A) and C)

Question 17

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) B) and C)
F) All of the above

Question 18

Which statement best describes the overall tax and transfer systems of the United States?

Accepted Answer

A)   Our tax system makes the after-tax distribution of income much more equal than the before-tax distribution.
B)   Our tax system does not by itself reallocate income; transfer payments help redistribute income from rich to poor.
C)   Although some federal taxes are progressive, this effect is more than offset by the regressivity of state and local taxes, which make the overall system extremely regressive.
D)   Recent changes in corporate income taxes and payroll taxes have made our overall tax system more progressive.E) B) and C)
F) B) and D)

Question 19

The marginal tax rate is the

Accepted Answer

A)   sum of all individual tax rates.
B)   tax rate paid by those with the lowest family incomes.
C)   total amount of taxes paid as a percentage of total income.
D)   increase in taxes as a percentage of an increase in income.E) C) and D)
F) None of the above

Question 20

If you pay a $2,000 tax on $10,000 of taxable income and a $4,000 tax on a taxable income of $16,000, the tax is progressive.

Accepted Answer

A) True 
 B)False

Exam 20: Public Finance: Expenditures and Taxes

The tax that is most difficult to shift to others would be

Correct AnswerverifiedShow Answer

(Consider This) Payout rates for state lotteries

Correct AnswerverifiedShow Answer

In economics, the "public sector" refers to the

Correct AnswerverifiedShow Answer

At the state and local levels of the U.S. government, a majority of government employees work in which of the following areas?

Correct AnswerverifiedB

The levying of licensing fees for automobiles is an example of taxation based on the ability-to-pay principle.

Correct AnswerverifiedShow Answer

The main difference between sales and excise taxes is that

Correct AnswerverifiedShow Answer

Joe complains that 32 percent of his income last year went to taxes. He is referring to his

Correct AnswerverifiedShow Answer

A tax is progressive if the average tax rate rises as income increases.

Correct AnswerverifiedShow Answer

The major expenditure of local governments is for education.

Correct AnswerverifiedTrue

According to data compiled by the Bureau of Economic Analysis, from 1960 to 2015, government transfer payments as a percentage of U.S. output have

Correct AnswerverifiedShow Answer

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

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If a tax is progressive, then

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Assume that in year 1 your average tax rate is 20 percent on a taxable income of $20,000. If the marginal tax rate on the next $10,000 of taxable income is 30 percent, what will be the average tax rate if your taxable income rises to $30,000?

Correct AnswerverifiedShow Answer

Which generalization is incorrect?

Correct AnswerverifiedC

Payroll taxes account for more than one-third of federal tax revenues.

Correct AnswerverifiedShow Answer

A progressive tax is such that

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

Correct AnswerverifiedShow Answer

Which statement best describes the overall tax and transfer systems of the United States?

Correct AnswerverifiedShow Answer

The marginal tax rate is the

Correct AnswerverifiedShow Answer

If you pay a $2,000 tax on $10,000 of taxable income and a $4,000 tax on a taxable income of $16,000, the tax is progressive.

Correct AnswerverifiedShow Answer

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B

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True

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C

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