Question 1

In the graph,S₀ = supply curve for bourbon (seller's supply) D = demand curve for bourbonSₜ = supply for bourbon plus excise tax on bourbon (effective supply as seen by buyers) tax = an excise tax on bourbon (of $20 per case) The excise tax on bourbon as described in the diagram is ultimately paid

Accepted Answer

A)  by buyers only.
B)  by sellers only.
C)  40 percent by buyers and 60 percent by sellers.
D)  60 percent by buyers and 40 percent by sellers.E) A) and B)
F) None of the above

Question 2

The rationale for ability-to-pay taxation and the contention that those with large incomes should pay more taxes both absolutely and relatively is that

Accepted Answer

A)  high-income receivers are generally in a better position to shift taxes than are low-income receivers.
B)  the transfer system is regressive and it is therefore essential to have an offsetting progressive tax structure.
C)  rational consumers spend their first dollars of income on the most urgently desired goods and successive dollars on less essential goods.
D)  taxes should be paid for financing public goods in direct proportion to the satisfaction an individual derives from those goods.E) C) and D)
F) None of the above

Question 3

A progressive tax takes relatively more from the rich than it does from the poor.

Accepted Answer

A) True 
 B)False

Question 4

In which of the given market situations will the largest portion of an excise tax of a specified amount per unit of output be borne by producers?

Accepted Answer

A)  4
B)  3
C)  1
D)  2E) A) and B)
F) A) and C)

Question 5

Refer to the income tax schedule given in the table. If your taxable income increases from $4,000 to $5,000, you will encounter a marginal tax rate of

Accepted Answer

A)  10 percent.
B)  15 percent.
C)  25 percent.
D)  40 percent.E) A) and B)
F) B) and D)

Question 6

Explain the probable incidence of a general sales tax imposed by a state.

Accepted Answer

A sales tax is a general excise tax levi...

Question 7

The graph illustrates the market for a product on which an excise tax has been imposed by government. What is the area that represents the efficiency loss due to the tax?

Accepted Answer

A)  XYT
B)  XYZ
C)  WXZU
D)  WXYZUE) A) and D)
F) None of the above

Question 8

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

Accepted Answer

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

Question 9

Indy currently earns $50,000 in taxable income and pays $8,000 in taxes. Suppose that Indy faces a marginal tax rate of 25 percent and his boss offers him a raise of $2,000 per year. Indy should

Accepted Answer

A)  accept the raise because his after-tax income will rise by $1,500.
B)  reject the raise because his after-tax income will fall by $3,000.
C)  reject the raise because his after-tax income will fall by $4,500.
D)  reject the raise because his after-tax income will fall by $6,000.E) A) and C)
F) A) and D)

Question 10

Give the most important source of revenue for local governments and their most important expenditure.

Accepted Answer

Local governments obtain about 72 percen...

Question 11

Describe the size of government employment as a percentage of the labor force. What is the major type of government employment at the state and local levels and at the federal level?

Accepted Answer

In 2016, U.S. governments (local, state,...

Question 12

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 D)
F) B) and D)

Question 13

The greater the elasticity of demand and supply, the greater is the efficiency loss of a tax.

Accepted Answer

A) True 
 B)False

Question 14

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) A) and B)

Question 15

The average tax rate is

Accepted Answer

A)  equal to the marginal tax rate if the tax is progressive.
B)  the total tax rate minus the marginal tax rate.
C)  the ratio of total taxes paid to total taxable income.
D)  the tax rate that applies to incremental dollars of income.E) All of the above
F) A) and B)

Question 16

If your income increases from $10,000 per year to $14,000 per year and your tax payment increases from $2,000 to $2,840, the marginal tax rate

Accepted Answer

A)  is 20 percent.
B)  is 21 percent.
C)  is 25 percent.
D)  cannot be determined from the given data.E) A) and B)
F) A) and C)

Question 17

The Social Security tax is regressive because it applies only on income below a "cap" income level.

Accepted Answer

A) True 
 B)False

Question 18

The three most important sources of federal tax revenue in order of descending importance are

Accepted Answer

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

Question 19

The U.S. federal expenditures for "pensions and income security" are dominated by

Accepted Answer

A)  housing subsidies.
B)  unemployment benefits.
C)  food stamps.
D)  Social Security payments.E) None of the above
F) C) and D)

Question 20

Assume you pay a tax of $10,000 on a taxable income of $50,000. If your taxable income were $150,000, your tax payment would be $25,000. This suggests that the tax is

Accepted Answer

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

Exam 20: Public Finance: Expenditures and Taxes

The three most important sources of federal tax revenue in order of descending importance are

Correct Answer
verified

The graph illustrates the market for a product on which an excise tax has been imposed by government. What is the area that represents the efficiency loss due to the tax?

Correct Answer
verified

The U.S. federal expenditures for "pensions and income security" are dominated by

Correct Answer
verified

A progressive tax takes relatively more from the rich than it does from the poor.

Correct Answer
verified

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

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 25 percent and his boss offers him a raise of $2,000 per year. Indy should

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

In which of the given market situations will the largest portion of an excise tax of a specified amount per unit of output be borne by producers?

Correct Answer
verified

Refer to the income tax schedule given in the table. If your taxable income increases from $4,000 to $5,000, you will encounter a marginal tax rate of

Correct Answer
verified

Explain the probable incidence of a general sales tax imposed by a state.

Correct Answer
verified
A sales tax is a general excise tax levi...
View Answer

Assume you pay a tax of $10,000 on a taxable income of $50,000. If your taxable income were $150,000, your tax payment would be $25,000. This suggests that the tax is

Correct Answer
verified

The Social Security tax is regressive because it applies only on income below a "cap" income level.

Correct Answer
verified

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

Correct Answer
verified

Give the most important source of revenue for local governments and their most important expenditure.

Correct Answer
verified
Local governments obtain about 72 percen...
View Answer

The rationale for ability-to-pay taxation and the contention that those with large incomes should pay more taxes both absolutely and relatively is that

Correct Answer
verified

If your income increases from $10,000 per year to $14,000 per year and your tax payment increases from $2,000 to $2,840, the marginal tax rate

Correct Answer
verified

Describe the size of government employment as a percentage of the labor force. What is the major type of government employment at the state and local levels and at the federal level?

Correct Answer
verified
In 2016, U.S. governments (local, state,...
View Answer

The greater the elasticity of demand and supply, the greater is the efficiency loss of a tax.

Correct Answer
verified

The average tax rate is

Correct Answer
verified

Exam 20: Public Finance: Expenditures and Taxes

The three most important sources of federal tax revenue in order of descending importance are

Correct AnswerverifiedShow Answer

The graph illustrates the market for a product on which an excise tax has been imposed by government. What is the area that represents the efficiency loss due to the tax?

Correct AnswerverifiedShow Answer

The U.S. federal expenditures for "pensions and income security" are dominated by

Correct AnswerverifiedShow Answer

A progressive tax takes relatively more from the rich than it does from the poor.

Correct AnswerverifiedShow Answer

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

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 25 percent and his boss offers him a raise of $2,000 per year. Indy should

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In which of the given market situations will the largest portion of an excise tax of a specified amount per unit of output be borne by producers?

Correct AnswerverifiedShow Answer

Refer to the income tax schedule given in the table. If your taxable income increases from $4,000 to $5,000, you will encounter a marginal tax rate of

Correct AnswerverifiedShow Answer

Explain the probable incidence of a general sales tax imposed by a state.

Correct AnswerverifiedA sales tax is a general excise tax levi...View AnswerShow Answer

Assume you pay a tax of $10,000 on a taxable income of $50,000. If your taxable income were $150,000, your tax payment would be $25,000. This suggests that the tax is

Correct AnswerverifiedShow Answer

The Social Security tax is regressive because it applies only on income below a "cap" income level.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Give the most important source of revenue for local governments and their most important expenditure.

Correct AnswerverifiedLocal governments obtain about 72 percen...View AnswerShow Answer

The rationale for ability-to-pay taxation and the contention that those with large incomes should pay more taxes both absolutely and relatively is that

Correct AnswerverifiedShow Answer

If your income increases from $10,000 per year to $14,000 per year and your tax payment increases from $2,000 to $2,840, the marginal tax rate

Correct AnswerverifiedShow Answer

Describe the size of government employment as a percentage of the labor force. What is the major type of government employment at the state and local levels and at the federal level?

Correct AnswerverifiedIn 2016, U.S. governments (local, state,...View AnswerShow Answer

The greater the elasticity of demand and supply, the greater is the efficiency loss of a tax.

Correct AnswerverifiedShow Answer

The average tax rate is

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
A sales tax is a general excise tax levi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Local governments obtain about 72 percen...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In 2016, U.S. governments (local, state,...
View Answer

Correct Answer
verified

Correct Answer
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