Question 1

(Consider This)  Which of the following claims is not made by defenders of lotteries?

Accepted Answer

A)   Lotteries are a relatively painless way to fund important government services.
B)   Lotteries help reduce organized crime by providing an alternative to illegal gambling.
C)   Lotteries are preferable to taxes because they are voluntary.
D)   Lotteries are progressive in nature, with higher income families playing more frequently.E) A) and B)
F) A) and D)

Question 2

Sales taxes on consumer goods are regressive because poor people consume a larger proportion of their incomes than do rich people.

Accepted Answer

A) True 
 B)False

Question 3

In 2015, personal income taxes contributed what percentage of total federal tax revenues in the U.S.?

Accepted Answer

A)   close to 50 percent
B)   between 60 percent and 70 percent
C)   about 33 percent
D)   around 90 percentE) None of the above
F) B) and D)

Question 4

The efficiency loss of a tax is the idea that

Accepted Answer

A)   in addition to taking income from the citizenry, taxes also increase the rate of inflation.
B)   taxes cause a decline in output for which marginal benefit exceeds marginal cost.
C)   taxes diminish incentives to work.
D)   government spends dollars less efficiently than do households and businesses.E) None of the above
F) A) and D)

Question 5

Which of the following is not a significant source of revenue for the U.S. federal government?

Accepted Answer

A)   personal income taxes
B)   corporate income taxes
C)   property taxes
D)   payroll taxesE) B) and C)
F) A) and D)

Question 6

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

Question 7

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 8

The supply curve for a product has infinite elasticity. An excise tax is levied on the product. The likely effect will be to

Accepted Answer

A)   reduce the amount the producer receives for each unit sold by the amount of the tax.
B)   increase the price the consumer pays per unit by the amount of the tax.
C)   increase the price to consumers by an amount less than the tax.
D)   increase the amount received by producers by less than the tax.E) A) and B)
F) C) and D)

Question 9

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) All of the above

Question 10

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) A) and B)
F) C) and D)

Question 11

If the supply of a product is perfectly elastic and demand is downsloping, an excise tax of $2 per unit will increase price by

Accepted Answer

A)   more than $2.
B)   less than $2.
C)   $2 and increase equilibrium output.
D)   $2 and reduce equilibrium output.E) None of the above
F) A) and C)

Question 12

The marginal tax rate is

Accepted Answer

A)   the difference between the total tax rate and the average tax rate.
B)   the percentage of total income paid as taxes.
C)   equal to the change in taxes/change in taxable income.
D)   equal to the total taxes/total taxable income.E) B) and D)
F) All of the above

Question 13

One distinction between government purchases and transfer payments is that

Accepted Answer

A)   purchase are exhaustive, whereas transfers are nonexhaustive.
B)   purchase are nonexhaustive, whereas transfers are exhaustive.
C)   purchases are part of total government spending, whereas transfers are not.
D)   purchases are not part of total government spending, whereas transfers are.E) A) and C)
F) A) and B)

Question 14

Approximately what percentage of the U.S. labor force works for U.S. governments at the federal, state, and local levels (as of 2013) ?

Accepted Answer

A)   8
B)   11
C)   14
D)   22E) A) and B)
F) A) and C)

Question 15

Entry fees at national parks and monuments are an example of

Accepted Answer

A)   the ability-to-pay principle of taxation.
B)   the benefits-received principle of taxation.
C)   government bureaucracy and inefficiency.
D)   the principle of limited and bundled choice.E) None of the above
F) All of the above

Question 16

"Tax Freedom Day" in the United States typically occurs in mid-July.

Accepted Answer

A) True 
 B)False

Question 17

Approximately what percentage of local government expenditures goes to finance education?

Accepted Answer

A)   36
B)   46
C)   53
D)   69E) A) and B)
F) A) and C)

Question 18

The overall tax structure of the United States is proportional or slightly regressive.

Accepted Answer

A) True 
 B)False

Question 19

The major sources of funds for the U.S. federal government include the following, except

Accepted Answer

A)   payroll taxes.
B)   proprietary income.
C)   borrowing.
D)   general sales taxes.E) A) and B)
F) A) and C)

Question 20

The following are government activities that are involved in public finance, except

Accepted Answer

A)   providing public goods and services, such as national defense and education.
B)   running government-owned enterprises, such as hospitals, utilities, and lotteries
C)   redistributing income through various taxes and income-transfer payments,
D)   regulating the activities of firms in the financial sector of the economy,E) B) and D)
F) B) and C)

Exam 20: Public Finance: Expenditures and Taxes

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

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The following are government activities that are involved in public finance, except

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One distinction between government purchases and transfer payments is that

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(Consider This) Which of the following claims is not made by defenders of lotteries?

Correct AnswerverifiedShow Answer

The efficiency loss of a tax is the idea that

Correct AnswerverifiedShow Answer

Approximately what percentage of local government expenditures goes to finance education?

Correct AnswerverifiedShow Answer

"Tax Freedom Day" in the United States typically occurs in mid-July.

Correct AnswerverifiedShow Answer

Sales taxes on consumer goods are regressive because poor people consume a larger proportion of their incomes than do rich people.

Correct AnswerverifiedShow Answer

The overall tax structure of the United States is proportional or slightly regressive.

Correct AnswerverifiedShow Answer

Entry fees at national parks and monuments are an example of

Correct AnswerverifiedShow Answer

In 2015, personal income taxes contributed what percentage of total federal tax revenues in the U.S.?

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

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The major sources of funds for the U.S. federal government include the following, except

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

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The marginal tax rate is

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Approximately what percentage of the U.S. labor force works for U.S. governments at the federal, state, and local levels (as of 2013) ?

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Which of the following is not a significant source of revenue for the U.S. federal government?

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

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If the supply of a product is perfectly elastic and demand is downsloping, an excise tax of $2 per unit will increase price by

Correct AnswerverifiedShow Answer

The supply curve for a product has infinite elasticity. An excise tax is levied on the product. The likely effect will be to

Correct AnswerverifiedShow Answer

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