Question 1

Taxes on commodities or on purchases are known as

Accepted Answer

A)  corporate income taxes.
B)  sales and excise taxes.
C)  personal income taxes.
D)  payroll taxes.E) A) and C)
F) All of the above

Question 2

The maximum federal marginal tax rate on taxable personal income is, as of 2019,

Accepted Answer

A)  50 percent.
B)  37 percent.
C)  35 percent.
D)  24 percent.E) C) and D)
F) A) and C)

Question 3

Assume you pay a tax of $4,000 on a taxable income of $24,000. If your taxable income were $30,000, your tax payment would be $5,000. This suggests that the tax is

Accepted Answer

A)  progressive.
B)  proportional.
C)  regressive.
D)  discriminatory.E) A) and B)
F) B) and D)

Question 4

Which of the following best reflects the ability-to-pay philosophy of taxation?

Accepted Answer

A)  a tax on residential property
B)  a progressive income tax
C)  an excise tax on gasoline
D)  an excise tax on coffeeE) B) and C)
F) C) and D)

Question 5

A person whose income has increased from $10,000 to $20,000 finds that her federal marginal tax rate has increased from 18 percent to 22 percent. This is an example of a

Accepted Answer

A)  regressive tax.
B)  progressive tax.
C)  proportional tax.
D)  fair tax.E) None of the above
F) A) and C)

Question 6

The benefits-received principle of taxation is

Accepted Answer

A)  the basis for the gasoline tax.
B)  easy to apply because benefits received are conveniently measurable.
C)  applied in income-redistribution programs.
D)  the principle behind the income tax system.E) A) and C)
F) B) and D)

Question 7

Sales taxes are proportional in relation to income because the same tax rate applies regardless of the size of a purchase.

Accepted Answer

A) True 
 B)False

Question 8

Which of the lines in the diagram represent(s) a regressive tax?

Accepted Answer

A)  both A and B
B)  D only
C)  C only
D)  B onlyE) B) and D)
F) B) and C)

Question 9

A tax structure is called progressive when

Accepted Answer

A)  the average tax rate decreases if income decreases.
B)  high-income groups pay more taxes absolutely than do low-income groups.
C)  the average tax rate on low-income groups exceeds the tax rate of high-income groups.
D)  the average tax rate is constant, but the absolute amount of taxes paid increases with income increases.E) C) and D)
F) B) and C)

Question 10

In designing taxes, the government economists might focus on the following goals, except

Accepted Answer

A)  minimizing efficiency losses.
B)  redistributing income or wealth from one group to another.
C)  reducing the negative externalities of certain activities.
D)  simplifying the estimation of demand elasticities that are relevant to tax incidence.E) A) and D)
F) A) and C)

Question 11

Indy currently earns $50,000 in taxable income and pays $8,000 in taxes. Suppose that Indy faces a marginal tax rate of 20 percent and his boss offers him a raise of $3,000 per year. Indy should

Accepted Answer

A)  accept the raise because his after-tax income will rise by $2,400.
B)  accept the raise because his after-tax income will rise by $400.
C)  reject the raise because his after-tax income will fall by $2,000.
D)  reject the raise because his after-tax income will fall by $1,500.E) All of the above
F) None of the above

Question 12

In general, the buyers will tend to pay a bigger share of a tax on a good when

Accepted Answer

A)  the price elasticities of supply and demand are low.
B)  the price elasticities of supply and demand are high.
C)  the price elasticity of supply is low and the price elasticity of demand is high.
D)  the price elasticity of supply is high and the price elasticity of demand is low.E) B) and D)
F) A) and C)

Question 13

If the marginal tax rate is 20 percent, by how much must income have increased if your tax bill increases by $300?

Accepted Answer

A)  $300
B)  $1,000
C)  $1,500
D)  The amount cannot be determined.E) None of the above
F) A) and B)

Question 14

(Advanced analysis) The equations for the demand and supply curves for a particular product are P = 10 − 0.4 Q and P = 2 + 0.4 Q, 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 + 0.4 Q. The excise tax on each unit of the product

Accepted Answer

A)  is $1.
B)  is $2.
C)  is $3.
D)  cannot be determined with the information given.E) A) and C)
F) None of the above

Question 15

The marginal tax rate is the tax rate that applies to additional income.

Accepted Answer

A) True 
 B)False

Question 16

The actual incidence of payroll taxes, in the consensus view, is

Accepted Answer

A)  split evenly between the worker and the employer.
B)  more on the employer than on the worker.
C)  more on the worker than on the employer.
D)  all on the employer, who remits the tax to the government.E) B) and D)
F) All of the above

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

In the U.S., the taxes mostly come from the rich and government spending mostly goes to programs that benefit the rich.

Accepted Answer

A) True 
 B)False

Question 19

With respect to state finance, for most states

Accepted Answer

A)  estate taxes are the major source of revenue and most expenditures are for health services.
B)  the corporate income tax is the major source of revenue and natural resource development is the major type of expenditure.
C)  property taxes are the basic source of revenue and education is the major type of expenditure.
D)  sales and excise taxes are the major source of revenue and education is the major type of expenditure.E) B) and D)
F) B) and C)

Question 20

Suppose that government imposes a specific excise tax on product X of $4 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 consumers of X pay $2 of the tax and the producers pay $2, we can conclude that the

Accepted Answer

A)  supply of X is inelastic.
B)  demand for X is elastic.
C)  demand for X is inelastic.
D)  demand for X is unitary elastic.E) B) and C)
F) None of the above

Exam 20: Public Finance: Expenditures and Taxes

The benefits-received principle of taxation is

Correct Answer
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Correct Answer
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The marginal tax rate is the tax rate that applies to additional income.

Correct Answer
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With respect to state finance, for most states

Correct Answer
verified

In general, the buyers will tend to pay a bigger share of a tax on a good when

Correct Answer
verified

Taxes on commodities or on purchases are known as

Correct Answer
verified

The maximum federal marginal tax rate on taxable personal income is, as of 2019,

Correct Answer
verified

Which of the following best reflects the ability-to-pay philosophy of taxation?

Correct Answer
verified

In the U.S., the taxes mostly come from the rich and government spending mostly goes to programs that benefit the rich.

Correct Answer
verified

Sales taxes are proportional in relation to income because the same tax rate applies regardless of the size of a purchase.

Correct Answer
verified

Indy currently earns $50,000 in taxable income and pays $8,000 in taxes. Suppose that Indy faces a marginal tax rate of 20 percent and his boss offers him a raise of $3,000 per year. Indy should

Correct Answer
verified

Suppose that government imposes a specific excise tax on product X of $4 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 consumers of X pay $2 of the tax and the producers pay $2, we can conclude that the

Correct Answer
verified

The actual incidence of payroll taxes, in the consensus view, is

Correct Answer
verified

In designing taxes, the government economists might focus on the following goals, except

Correct Answer
verified

A person whose income has increased from $10,000 to $20,000 finds that her federal marginal tax rate has increased from 18 percent to 22 percent. This is an example of a

Correct Answer
verified

Which of the lines in the diagram represent(s) a regressive tax?

Correct Answer
verified

A tax structure is called progressive when

Correct Answer
verified

Assume you pay a tax of $4,000 on a taxable income of $24,000. If your taxable income were $30,000, your tax payment would be $5,000. This suggests that the tax is

Correct Answer
verified

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

Correct Answer
verified

If the marginal tax rate is 20 percent, by how much must income have increased if your tax bill increases by $300?

Correct Answer
verified

Exam 20: Public Finance: Expenditures and Taxes

The benefits-received principle of taxation is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The marginal tax rate is the tax rate that applies to additional income.

Correct AnswerverifiedShow Answer

With respect to state finance, for most states

Correct AnswerverifiedShow Answer

In general, the buyers will tend to pay a bigger share of a tax on a good when

Correct AnswerverifiedShow Answer

Taxes on commodities or on purchases are known as

Correct AnswerverifiedShow Answer

The maximum federal marginal tax rate on taxable personal income is, as of 2019,

Correct AnswerverifiedShow Answer

Which of the following best reflects the ability-to-pay philosophy of taxation?

Correct AnswerverifiedShow Answer

In the U.S., the taxes mostly come from the rich and government spending mostly goes to programs that benefit the rich.

Correct AnswerverifiedShow Answer

Sales taxes are proportional in relation to income because the same tax rate applies regardless of the size of a purchase.

Correct AnswerverifiedShow Answer

Indy currently earns $50,000 in taxable income and pays $8,000 in taxes. Suppose that Indy faces a marginal tax rate of 20 percent and his boss offers him a raise of $3,000 per year. Indy should

Correct AnswerverifiedShow Answer

Suppose that government imposes a specific excise tax on product X of $4 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 consumers of X pay $2 of the tax and the producers pay $2, we can conclude that the

Correct AnswerverifiedShow Answer

The actual incidence of payroll taxes, in the consensus view, is

Correct AnswerverifiedShow Answer

In designing taxes, the government economists might focus on the following goals, except

Correct AnswerverifiedShow Answer

A person whose income has increased from $10,000 to $20,000 finds that her federal marginal tax rate has increased from 18 percent to 22 percent. This is an example of a

Correct AnswerverifiedShow Answer

Which of the lines in the diagram represent(s) a regressive tax?

Correct AnswerverifiedShow Answer

A tax structure is called progressive when

Correct AnswerverifiedShow Answer

Assume you pay a tax of $4,000 on a taxable income of $24,000. If your taxable income were $30,000, your tax payment would be $5,000. This suggests that the tax is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the marginal tax rate is 20 percent, by how much must income have increased if your tax bill increases by $300?

Correct AnswerverifiedShow Answer

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