Question 1

The primary intent of the tax on tobacco is to:

Accepted Answer

A)   reduce its consumption.
B)   raise government revenues.
C)   increase market surplus.
D)   support producers of tobacco.E) A) and B)
F) A) and C)

Question 2

A bridge that typically gets 1,000 cars per day is installing a new toll next week of $0.50 per car.The tax revenues generated will be:

Accepted Answer

A)   $1,000.
B)   $500.
C)   less than $500.
D)   between $500 and $1,000.E) A) and B)
F) B) and C)

Question 3

When a government earns more than it spends in revenue,we say that it has a:

Accepted Answer

A)   budget surplus.
B)   budget deficit.
C)   federal debt.
D)   federal deficit.E) A) and B)
F) B) and D)

Question 4

Corporate taxes in the US are:

Accepted Answer

A)   regressive.
B)   proportional.
C)   progressive.
D)   a flat tax that adjusts with inflation.E) All of the above
F) A) and D)

Question 5

When raising taxes,the quantity effect tells us that the:

Accepted Answer

A)   government gets more revenue per units sold.
B)   higher tax rate causes fewer units to be sold.
C)   government gets less revenue per unit sold.
D)   higher tax rate causes more units to be supplied.E) A) and C)
F) B) and C)

Question 6

Deadweight loss as a result of taxation occurs because the:

Accepted Answer

A)   quantity of a good that is bought and sold is above the market equilibrium quantity.
B)   price that is charged to the consumer is lower than the price the seller receives.
C)   price that is charged to the consumer is above the market equilibrium quantity.
D)   quantity of a good that is bought and sold is below the market equilibrium quantity.E) A) and D)
F) A) and B)

Question 7

Many tax-funded programs are intended to:

Accepted Answer

A)   decrease surplus.
B)   increase income inequality.
C)   provide basic human needs.
D)   fail due to underfunding.E) A) and D)
F) None of the above

Question 8

Taxes are generally classified into these three categories:

Accepted Answer

A)   progressive, regressive, lump-sum
B)   progressive, regressive, proportional
C)   proportional, flat tax, gradual
D)   gradual, proportional, progressiveE) B) and D)
F) A) and B)

Question 9

The deadweight loss a tax causes depends on all of the following except:

Accepted Answer

A)   how responsive buyers and sellers are to a price change.
B)   the price elasticity of supply.
C)   the price elasticity of demand.
D)   who the tax is imposed upon.E) B) and C)
F) A) and D)

Question 10

In the real world,lump-sum taxes are:

Accepted Answer

A)   perceived as unfair.
B)   rarely used.
C)   very efficient.
D)   All of these statements are true.E) B) and D)
F) C) and D)

Question 11

In the real world,lump-sum taxes are:

Accepted Answer

A)   rarely used.
B)   commonly used.
C)   applied only to the wealthy in the U.S.
D)   very common in non-western nations.E) B) and C)
F) A) and C)

Question 12

The American individual income tax is:

Accepted Answer

A)   progressive.
B)   regressive.
C)   proportional.
D)   a lump sum.E) A) and B)
F) All of the above

Question 13

If Jen earns $80,000 a year and pays $16,000 in taxes,and Gary earns $100,000 a year and pays $16,000 a year in taxes,the tax system must be:

Accepted Answer

A)   flat.
B)   proportional.
C)   progressive.
D)   lump-sum.E) None of the above
F) A) and B)

Question 14

A tax that takes the same percentage of tax from all taxpayers is called a:

Accepted Answer

A)   progressive tax.
B)   regressive tax.
C)   flat tax.
D)   lump-sum tax.E) None of the above
F) All of the above

Question 15

The question of how people's behavior changes in response to taxes:

Accepted Answer

A)   has been studied and is well known today.
B)   is the subject of much research.
C)   was generally accepted and has recently come under examination again.
D)   None of these statements is true.E) A) and C)
F) C) and D)

Question 16

The Laffer curve demonstrates that raising tax rates:

Accepted Answer

A)   increases then decreases tax revenues.
B)   always increases tax revenues.
C)   always decreases tax revenues.
D)   decreases then increases tax revenues.E) A) and C)
F) B) and C)

Question 17

One of the basic trade-offs inherent in designing a tax system is between:

Accepted Answer

A)   surplus and revenues.
B)   supply and demand.
C)   efficiency and equity.
D)   price and quantity.E) B) and C)
F) None of the above

Question 18

The marginal tax rate refers to the tax rate charged on the:

Accepted Answer

A)   last dollar a taxpayer earns.
B)   income earned from buying investments and selling them at a higher price.
C)   earnings of individuals.
D)   value of a good or service being purchased.E) B) and D)
F) C) and D)

Question 19

Entitlement spending:

Accepted Answer

A)   is public expenditure that is mandated and regulated by permanent laws.
B)   rises and falls with the number of people who are eligible recipients.
C)   cannot be reduced without changing the laws outlining eligibility.
D)   All of these statements are true.E) All of the above
F) A) and C)

Question 20

The economic incidence of the tax means who:

Accepted Answer

A)   is legally obligated to pay the tax to the government.
B)   actually loses more surplus as a result of the tax.
C)   benefits the most from of any sort of tax.
D)   gains surplus as a result of the government redistributing tax revenue.E) A) and B)
F) C) and D)

Exam 20: Taxation and the Public Budget

The question of how people's behavior changes in response to taxes:

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A bridge that typically gets 1,000 cars per day is installing a new toll next week of $0.50 per car.The tax revenues generated will be:

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In the real world,lump-sum taxes are:

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A tax that takes the same percentage of tax from all taxpayers is called a:

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The American individual income tax is:

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The marginal tax rate refers to the tax rate charged on the:

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One of the basic trade-offs inherent in designing a tax system is between:

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Deadweight loss as a result of taxation occurs because the:

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Taxes are generally classified into these three categories:

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When a government earns more than it spends in revenue,we say that it has a:

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The primary intent of the tax on tobacco is to:

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In the real world,lump-sum taxes are:

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If Jen earns $80,000 a year and pays $16,000 in taxes,and Gary earns $100,000 a year and pays $16,000 a year in taxes,the tax system must be:

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The economic incidence of the tax means who:

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The Laffer curve demonstrates that raising tax rates:

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Corporate taxes in the US are:

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Entitlement spending:

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Many tax-funded programs are intended to:

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The deadweight loss a tax causes depends on all of the following except:

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When raising taxes,the quantity effect tells us that the:

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