Question 1

For all employee earnings subject to Social Security taxes,what is the current Social Security tax rate for employees?

Accepted Answer

A)  0.8%
B)  2.9%
C)  4.2%
D)  6.2%E) All of the above
F) None of the above

Question 2

How would the market for coffee be affected if the government charged an excise tax of $1.00 on each unit of coffee sold?

Accepted Answer

A)  There would be a shortage of coffee.
B)  The demand for coffee would increase.
C)  The demand for coffee would decrease.
D)  The supply curve would shift up vertically by $1.00.E) A) and C)
F) None of the above

Question 3

Assume a family that earns $30,000 pays $3,000 in income taxes,while a family that earns $40,000 pays $3,500 in income taxes.In this situation,the income tax system is

Accepted Answer

A)  progressive.
B)  regressive.
C)  proportional.
D)  one of the above but we cannot tell which one without more information.E) B) and C)
F) A) and B)

Question 4

In a progressive tax system,

Accepted Answer

A)  the marginal tax rate and the average tax rate are the same for every income level and the same as income increases.
B)  the marginal tax rate increase as income increases but the average tax rate does not change as income increases.
C)  the marginal tax rate and the average tax rate increase as income levels increase and the marginal tax rate exceeds the average tax rate.
D)  the marginal tax rate and the average tax rate decrease as income levels increase and the marginal tax rate is less than the average tax rate.E) None of the above
F) A) and B)

Question 5

The sum of public spending on goods and services and transfer payments during a given period cannot exceed tax revenues plus borrowed funds.This is the statement for

Accepted Answer

A)  ad valorem taxation.
B)  an excise tax.
C)  a sales tax.
D)  the government budget constraint.E) None of the above
F) All of the above

Question 6

The marginal tax rate is

Accepted Answer

A)  the sum of all individual tax rates.
B)  the total taxes paid as a percentage of total income.
C)  the average tax rate paid by both individuals and corporations.
D)  the increase in taxes as a percentage of the increase in income.E) A) and B)
F) All of the above

Question 7

When income is $15,000,the amount of income taxes owed is $2,000;when income increases to $20,000,the amount owed increases to $3,000.The average income tax rate when a person earns $15,000 is

Accepted Answer

A)  75 percent.
B)  15 percent.
C)  13.3 percent.
D)  20 percent.E) C) and D)
F) A) and B)

Question 8

What are the three sources of funding for the public sector? Can the government rely on all of these sources in the long run? Explain.

Accepted Answer

The three sources are (1)explicit user f...

Question 9

Using the fiscal year 2013 estimates,the largest component of federal revenue is the

Accepted Answer

A)  individual income tax.
B)  corporate income tax.
C)  excise tax.
D)  social insurance and contributions.E) A) and B)
F) None of the above

Question 10

Dynamic tax analysis is an economic evaluation of tax rate changes

Accepted Answer

A)  by the National Tax Institute in Burlington,Massachusetts.
B)  by various state governments.
C)  by the tax institutes established by a consortium of business schools.
D)  based on the assumption that tax base declines if tax rates continuously increase.E) None of the above
F) A) and D)

Question 11

The marginal tax rate shows

Accepted Answer

A)  the percentage of income which a typical family pays in tax.
B)  the average rate of taxation in the economy.
C)  the deductions which are permitted for child care and medical expenses.
D)  the extra tax due on an extra dollar of income.E) A) and D)
F) B) and D)

Question 12

Static tax analysis assumes

Accepted Answer

A)  all of the present tax rates will be in place for a minimum of twenty years.
B)  changes in the tax rates have no effect on the tax base.
C)  changes in the tax rates have no effect on tax revenue.
D)  changes in the tax rates will change the tax base.E) A) and B)
F) A) and C)

Question 13

Advocates of a progressive income tax use arguments EXCEPT for which of the following?

Accepted Answer

A)  A progressive tax system taxes according to ability to pay.
B)  A progressive tax system taxes according to benefits received.
C)  A progressive tax system helps redistribute income away from the rich and towards the poor.
D)  A progressive tax system maximizes government revenues.E) C) and D)
F) A) and C)

Question 14

If a new unit excise tax is levied on bottles of wine,the

Accepted Answer

A)  demand for wine shifts to the left.
B)  demand for wine shifts to the right.
C)  supply of wine shifts to the right.
D)  supply of wine shifts to the left.E) A) and B)
F) C) and D)

Question 15

Which of the following forms of taxation accounts for the largest share of taxes received by state and local governments?

Accepted Answer

A)  sales,excise,and gross receipts taxes
B)  personal and corporate income taxes
C)  license and permit fees
D)  property taxesE) None of the above
F) A) and B)

Question 16

Suppose the income tax rate is 0 percent on the first $10,000;10 percent on the next $20,000;20 percent on the next $20,000;30 percent on the next $20,000;and 40 percent on all income above $70,000.Family A has income of $100,000 while Family B has income of $40,000.The marginal tax rates faced by the two families are

Accepted Answer

A)  40 percent on A and 10 percent on B.
B)  40 percent on A and 20 percent on B.
C)  30 percent on A and 20 percent on B.
D)  30 percent on A and 30 percent on B.E) B) and D)
F) A) and D)

Question 17

Suppose you purchased 100 shares of stock in 2010 for $25 a share and you sell them today for $50 a share.If the capital gains tax is 28 percent,your tax liability is

Accepted Answer

A)  $70.
B)  $700.
C)  $2500.
D)  indeterminate without knowing the inflation rate.E) A) and B)
F) B) and D)

Question 18

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

Accepted Answer

A)  individual income taxes
B)  property taxes
C)  social insurance taxes and contributions
D)  corporate income taxesE) A) and B)
F) None of the above

Question 19

A unit tax of $0.60 will always

Accepted Answer

A)  shift the supply curve upward by more than $0.60.
B)  shift the supply curve upward by less than $0.60.
C)  shift the supply curve up by exactly $0.60.
D)  leave the supply curve unchanged.E) B) and C)
F) None of the above

Question 20

Should the government wish to lower the price of gasoline to the consumer,one approach might be

Accepted Answer

A)  to raise the gasoline excise tax.
B)  to reduce the gasoline excise tax.
C)  to take action to shift the supply curve of gasoline to the left.
D)  to lower taxes on automobiles.E) B) and C)
F) A) and B)

Exam 6: Funding the Public Sector

Using the fiscal year 2013 estimates,the largest component of federal revenue is the

Correct Answer
verified

How would the market for coffee be affected if the government charged an excise tax of $1.00 on each unit of coffee sold?

Correct Answer
verified

The sum of public spending on goods and services and transfer payments during a given period cannot exceed tax revenues plus borrowed funds.This is the statement for

Correct Answer
verified

Correct Answer
verified

Advocates of a progressive income tax use arguments EXCEPT for which of the following?

Correct Answer
verified

Suppose you purchased 100 shares of stock in 2010 for $25 a share and you sell them today for $50 a share.If the capital gains tax is 28 percent,your tax liability is

Correct Answer
verified

Should the government wish to lower the price of gasoline to the consumer,one approach might be

Correct Answer
verified

A unit tax of $0.60 will always

Correct Answer
verified

Static tax analysis assumes

Correct Answer
verified

For all employee earnings subject to Social Security taxes,what is the current Social Security tax rate for employees?

Correct Answer
verified

The marginal tax rate is

Correct Answer
verified

What are the three sources of funding for the public sector? Can the government rely on all of these sources in the long run? Explain.

Correct Answer
verified
The three sources are (1)explicit user f...
View Answer

In a progressive tax system,

Correct Answer
verified

If a new unit excise tax is levied on bottles of wine,the

Correct Answer
verified

When income is $15,000,the amount of income taxes owed is $2,000;when income increases to $20,000,the amount owed increases to $3,000.The average income tax rate when a person earns $15,000 is

Correct Answer
verified

The marginal tax rate shows

Correct Answer
verified

Assume a family that earns $30,000 pays $3,000 in income taxes,while a family that earns $40,000 pays $3,500 in income taxes.In this situation,the income tax system is

Correct Answer
verified

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

Correct Answer
verified

Dynamic tax analysis is an economic evaluation of tax rate changes

Correct Answer
verified

Which of the following forms of taxation accounts for the largest share of taxes received by state and local governments?

Correct Answer
verified

Exam 6: Funding the Public Sector

Using the fiscal year 2013 estimates,the largest component of federal revenue is the

Correct AnswerverifiedShow Answer

How would the market for coffee be affected if the government charged an excise tax of $1.00 on each unit of coffee sold?

Correct AnswerverifiedShow Answer

The sum of public spending on goods and services and transfer payments during a given period cannot exceed tax revenues plus borrowed funds.This is the statement for

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Advocates of a progressive income tax use arguments EXCEPT for which of the following?

Correct AnswerverifiedShow Answer

Suppose you purchased 100 shares of stock in 2010 for $25 a share and you sell them today for $50 a share.If the capital gains tax is 28 percent,your tax liability is

Correct AnswerverifiedShow Answer

Should the government wish to lower the price of gasoline to the consumer,one approach might be

Correct AnswerverifiedShow Answer

A unit tax of $0.60 will always

Correct AnswerverifiedShow Answer

Static tax analysis assumes

Correct AnswerverifiedShow Answer

For all employee earnings subject to Social Security taxes,what is the current Social Security tax rate for employees?

Correct AnswerverifiedShow Answer

The marginal tax rate is

Correct AnswerverifiedShow Answer

What are the three sources of funding for the public sector? Can the government rely on all of these sources in the long run? Explain.

Correct AnswerverifiedThe three sources are (1)explicit user f...View AnswerShow Answer

In a progressive tax system,

Correct AnswerverifiedShow Answer

If a new unit excise tax is levied on bottles of wine,the

Correct AnswerverifiedShow Answer

When income is $15,000,the amount of income taxes owed is $2,000;when income increases to $20,000,the amount owed increases to $3,000.The average income tax rate when a person earns $15,000 is

Correct AnswerverifiedShow Answer

The marginal tax rate shows

Correct AnswerverifiedShow Answer

Assume a family that earns $30,000 pays $3,000 in income taxes,while a family that earns $40,000 pays $3,500 in income taxes.In this situation,the income tax system is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Dynamic tax analysis is an economic evaluation of tax rate changes

Correct AnswerverifiedShow Answer

Which of the following forms of taxation accounts for the largest share of taxes received by state and local governments?

Correct AnswerverifiedShow Answer

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The three sources are (1)explicit user f...
View Answer

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