Question 1

(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 C)
F) A) and D)

Question 2

The basic tax rate on taxable corporate income is

Accepted Answer

A)  15 percent.
B)  22 percent.
C)  35 percent.
D)  52 percent.E) B) and C)
F) A) and D)

Question 3

Most economists believe that property taxes

Accepted Answer

A)  should be eliminated.
B)  are progressive.
C)  are regressive.
D)  should become an important source of revenue for the federal government.E) A) and C)
F) A) and B)

Question 4

Government purchases of goods and services are

Accepted Answer

A)  nonexhaustive because they do not directly absorb resources and account for production.
B)  exhaustive because they directly absorb or employ resources and account for production.
C)  both exhaustive and nonexhaustive because in some cases they do directly absorb resources or account for production and in other cases they do not.
D)  neither exhaustive nor nonexhaustive because of the tax revenues that finance these purchases.E) A) and B)
F) A) and C)

Question 5

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) None of the above
F) All of the above

Question 6

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) C) and D)

Question 7

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

Question 8

A federal excise tax on tires for cars and trucks would be an example of the

Accepted Answer

A)  benefits-received principle of taxation.
B)  ability-to-pay principle of taxation.
C)  proportional tax.
D)  progressive tax.E) A) and D)
F) C) and D)

Question 9

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 consumers pay $1.80 of the tax and the producers pay $.20, 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) None of the above
F) B) and C)

Question 10

Excise taxes of the federal government include the following items, except a(n)

Accepted Answer

A)  alcoholic beverage tax.
B)  tobacco tax.
C)  general sales tax.
D)  gasoline tax.E) All of the above
F) B) and C)

Question 11

Transfer payments are about percent of U.S.domestic output (as of 2015) .

Accepted Answer

A)  35
B)  8
C)  15
D)  22E) B) and D)
F) A) and B)

Question 12

Between the government and households, money or funds tend to flow only in one direction: from households to government.

Accepted Answer

A) True 
 B)False

Question 13

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 the things stated in the other possible answers.E) A) and B)
F) All of the above

Question 14

(Last Word)  Which of the following statements about taxes and government spending is correct?

Accepted Answer

A)  Despite the overall progressive tax system, government expenditures disproportionately favor the rich and result in a system that is slightly regressive.
B)  The progressive tax system is almost perfectly offset by regressive expenditures, making the overall system proportional.
C)  The regressive tax system is offset by expenditures directed toward lower-income households, making the overall system proportional.
D)  The overall system of taxes and spending is progressive, as over $1 trillion per year gets transferred from upper-income households to lower- and middle-income households.E) All of the above
F) C) and D)

Question 15

With a tax of $4,000 on $20,000 of income and $6,000 on $30,000 of income, the average tax rate is

Accepted Answer

A)  constant at 10 percent.
B)  lower than the marginal tax rate.
C)  equal to the marginal tax rate.
D)  higher than the marginal tax rate, which is equal to zero.E) B) and D)
F) C) and D)

Question 16

(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.The efficiency loss of this tax is

Accepted Answer

A)  $125.00.
B)  $62.50.
C)  $87.50.
D)  $1.00.E) B) and C)
F) A) and D)

Question 17

If the demand for a product is perfectly inelastic, the incidence of an excise tax will be

Accepted Answer

A)  entirely on the buyer.
B)  mostly on the buyer.
C)  entirely on the seller.
D)  mostly on the seller.E) A) and B)
F) A) and C)

Question 18

The efficiency loss of a tax is the tax revenue collected by government minus the value of the public goods financed through the tax.

Accepted Answer

A) True 
 B)False

Question 19

The flow of "net taxes" in the circular flow model with a government sector accounts for the following items, except

Accepted Answer

A)  transfer payments such as social security benefits.
B)  subsidies to farmers, airlines, and others.
C)  proprietary income generated by public utilities and state lotteries.
D)  salaries to military personnel, public school teachers, and government inspectors.E) None of the above
F) B) and C)

Question 20

The probable incidence of the tax on business property is on consumers.

Accepted Answer

A) True 
 B)False

Exam 20: Public Finance: Expenditures and Taxes

(Last Word) Which of the following statements about taxes and government spending is correct?

Correct Answer
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Excise taxes of the federal government include the following items, except a(n)

Correct Answer
verified

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

Correct Answer
verified

The flow of "net taxes" in the circular flow model with a government sector accounts for the following items, except

Correct Answer
verified

The basic tax rate on taxable corporate income is

Correct Answer
verified

A federal excise tax on tires for cars and trucks would be an example of the

Correct Answer
verified

The efficiency loss of a tax is the tax revenue collected by government minus the value of the public goods financed through the tax.

Correct Answer
verified

The probable incidence of the tax on business property is on consumers.

Correct Answer
verified

Correct Answer
verified

Most economists believe that property taxes

Correct Answer
verified

With a tax of $4,000 on $20,000 of income and $6,000 on $30,000 of income, the average tax rate is

Correct Answer
verified

Transfer payments are about percent of U.S.domestic output (as of 2015) .

Correct Answer
verified

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 consumers pay $1.80 of the tax and the producers pay $.20, we can conclude that the

Correct Answer
verified

Correct Answer
verified

Between the government and households, money or funds tend to flow only in one direction: from households to government.

Correct Answer
verified

Government purchases of goods and services are

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

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

Correct Answer
verified

If the demand for a product is perfectly inelastic, the incidence of an excise tax will be

Correct Answer
verified

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

Correct Answer
verified

Exam 20: Public Finance: Expenditures and Taxes

(Last Word) Which of the following statements about taxes and government spending is correct?

Correct AnswerverifiedShow Answer

Excise taxes of the federal government include the following items, except a(n)

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The flow of "net taxes" in the circular flow model with a government sector accounts for the following items, except

Correct AnswerverifiedShow Answer

The basic tax rate on taxable corporate income is

Correct AnswerverifiedShow Answer

A federal excise tax on tires for cars and trucks would be an example of the

Correct AnswerverifiedShow Answer

The efficiency loss of a tax is the tax revenue collected by government minus the value of the public goods financed through the tax.

Correct AnswerverifiedShow Answer

The probable incidence of the tax on business property is on consumers.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Most economists believe that property taxes

Correct AnswerverifiedShow Answer

With a tax of $4,000 on $20,000 of income and $6,000 on $30,000 of income, the average tax rate is

Correct AnswerverifiedShow Answer

Transfer payments are about percent of U.S.domestic output (as of 2015) .

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 consumers pay $1.80 of the tax and the producers pay $.20, we can conclude that the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Between the government and households, money or funds tend to flow only in one direction: from households to government.

Correct AnswerverifiedShow Answer

Government purchases of goods and services are

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

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

Correct AnswerverifiedShow Answer

If the demand for a product is perfectly inelastic, the incidence of an excise tax will be

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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