Question 1

If the primary goal in implementing a tax is to maximize efficiency and minimize deadweight loss,the government should impose:

Accepted Answer

A)  an income tax.
B)  a head tax.
C)  a sin tax.
D)  a proportional tax.E) B) and C)
F) B) and D)

Question 2

Lump-sum taxes reduce the total amount of revenue that can be raised because:

Accepted Answer

A)  the size of the tax is limited by the poorest citizens' ability to pay.
B)  people perceive them to be unfair.
C)  they have large administrative burdens.
D)  All of these are reasons why they reduce the amount of revenue that can be raised.E) All of the above
F) C) and D)

Question 3

The federal income tax _____________ compared to a state sales tax.

Accepted Answer

A)  has a higher administrative burden
B)  is less efficient
C)  is more complex
D)  All of these statements are true.E) C) and D)
F) A) and C) D

Question 4

The American individual income tax is:

Accepted Answer

A)  progressive.
B)  regressive.
C)  proportional.
D)  a lump sum,due April 15th.E) None of the above
F) A) and C)

Question 5

When a tax is placed on sellers,the actual incidence:

Accepted Answer

A)  falls solely on the seller.
B)  falls solely on the buyer.
C)  is shared between the seller and buyer.
D)  is often zero.E) B) and D)
F) B) and C)

Question 6

We can describe who bears the burden of any sort of tax by using the concept of:

Accepted Answer

A)  marginal burden.
B)  incidence.
C)  payee.
D)  marginal tax rate.E) B) and D)
F) None of the above

Question 7

The side of the market that is more inelastic:

Accepted Answer

A)  will bear more of the tax burden.
B)  will bear less of the tax burden.
C)  will share an equal amount of the tax burden.
D)  determines whether to shoulder the majority of the tax burden or pass it on.E) B) and C)
F) B) and D)

Question 8

A tax on the earnings of individuals is called the:

Accepted Answer

A)  payroll tax.
B)  personal income tax.
C)  corporate income tax.
D)  excise tax.E) A) and B)
F) B) and D)

Question 9

The largest source of income for most people is:

Accepted Answer

A)  wages earned at work.
B)  income from interest in savings accounts.
C)  rental income from properties you own.
D)  investment income.E) A) and D)
F) A) and C)

Question 10

The federal income tax _______________ compared to a state sales tax.

Accepted Answer

A)  has a higher administrative burden
B)  has a lower administrative burden
C)  is less complex
D)  is administered basically the same asE) A) and B)
F) None of the above

Question 11

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)  regressive.
B)  proportional.
C)  progressive.
D)  lump-sum.E) B) and C)
F) A) and B) D

Question 12

FICA,the tax that supports Medicare and Social Security,is generally:

Accepted Answer

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

Question 13

A sales tax is a tax on:

Accepted Answer

A)  the earnings of individuals and corporations.
B)  income earned by buying investments and selling them at a higher price.
C)  the wages paid to an employee.
D)  the value of a good or service being purchased.E) All of the above
F) A) and B)

Question 14

An example of a tax-funded program intended to provide basic human needs is the provision of:

Accepted Answer

A)  public education.
B)  police protection.
C)  health care.
D)  national defense.E) None of the above
F) A) and B)

Question 15

If the price effect outweighs the quantity effect,then a tax:

Accepted Answer

A)  increase will increase revenue.
B)  decrease will increase revenue.
C)  increase will decrease revenue.
D)  None of these statements is true.E) A) and B)
F) A) and C)

Question 16

In general,the more complex the tax:

Accepted Answer

A)  the more tax revenues it will generate.
B)  the more efficient it will be.
C)  the higher the administrative burden will be.
D)  the more deadweight loss it will create.E) B) and C)
F) B) and D) C

Question 17

In the real world,lump-sum taxes are:

Accepted Answer

A)  rare.
B)  common.
C)  applied only to the wealthy in the U.S.
D)  None of these statements is true.E) A) and B)
F) A) and C)

Question 18

In deciding which programs the government should fund with tax revenues there is:

Accepted Answer

A)  perfect consensus before a program is funded.
B)  often widespread disagreement.
C)  always a popular vote for new programs.
D)  the ability of each individual to decide where his tax dollars are spent.E) None of the above
F) A) and D)

Question 19

Most research suggests that the elasticity of the labor supply with respect to taxes is:

Accepted Answer

A)  very low for most people.
B)  very high for most people.
C)  highly variable across people.
D)  unpredictable in most settings.E) A) and B)
F) A) and C)

Question 20

Research shows that people rearrange their income from different sources to reduce their:

Accepted Answer

A)  tax burden.
B)  tax rate.
C)  necessary work hours.
D)  total bill.E) B) and D)
F) A) and B)

Exam 20: Taxation and the Public Budget

If the primary goal in implementing a tax is to maximize efficiency and minimize deadweight loss,the government should impose:

Correct AnswerverifiedShow Answer

Lump-sum taxes reduce the total amount of revenue that can be raised because:

Correct AnswerverifiedShow Answer

The federal income tax _____________ compared to a state sales tax.

Correct AnswerverifiedD

The American individual income tax is:

Correct AnswerverifiedShow Answer

When a tax is placed on sellers,the actual incidence:

Correct AnswerverifiedShow Answer

We can describe who bears the burden of any sort of tax by using the concept of:

Correct AnswerverifiedShow Answer

The side of the market that is more inelastic:

Correct AnswerverifiedShow Answer

A tax on the earnings of individuals is called the:

Correct AnswerverifiedShow Answer

The largest source of income for most people is:

Correct AnswerverifiedShow Answer

The federal income tax _______________ compared to a state sales tax.

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedD

FICA,the tax that supports Medicare and Social Security,is generally:

Correct AnswerverifiedShow Answer

A sales tax is a tax on:

Correct AnswerverifiedShow Answer

An example of a tax-funded program intended to provide basic human needs is the provision of:

Correct AnswerverifiedShow Answer

If the price effect outweighs the quantity effect,then a tax:

Correct AnswerverifiedShow Answer

In general,the more complex the tax:

Correct AnswerverifiedC

In the real world,lump-sum taxes are:

Correct AnswerverifiedShow Answer

In deciding which programs the government should fund with tax revenues there is:

Correct AnswerverifiedShow Answer

Most research suggests that the elasticity of the labor supply with respect to taxes is:

Correct AnswerverifiedShow Answer

Research shows that people rearrange their income from different sources to reduce their:

Correct AnswerverifiedShow Answer

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D

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D

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C

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