Question 1

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 2

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

Question 3

The federal income tax is consistent with the __________ principle of taxation,whereas an excise tax on sporting event tickets is consistent with the ___________ principle of taxation.

Accepted Answer

A)   benefits-received;ability-to-pay.
B)   benefits-received;pay-as-you-go.
C)   ability-to-pay;benefits-received.
D)   ability-to-pay;pay-as-you-go.E) A) and D)
F) All of the above

Question 4

(Last Word) For each dollar paid in taxes,approximately how much do households in the top quintile receive back in the form of government expenditures?

Accepted Answer

A)   12 cents.
B)   28 cents.
C)   41 cents.
D)   73 cents.E) A) and B)
F) B) and D)

Question 5

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

Question 6

The sales tax is a regressive tax because the:

Accepted Answer

A)   percentage of income paid as taxes falls as income rises.
B)   administrative costs associated with the collection of the tax are relatively high.
C)   percentage of income paid as taxes is constant as income rises.
D)   tax tends to reduce the total volume of consumption expenditures.E) All of the above
F) C) and D)

Question 7

The main difference between sales and excise taxes is that:

Accepted Answer

A)   sales taxes apply to a wide range of products,while excise taxes apply only to a select group of products.
B)   excise taxes apply to a wide range of products,while sales taxes apply only to a select list of products.
C)   sales taxes are consumption taxes,while excise taxes are not.
D)   excise taxes are consumption taxes,while sales taxes are not.E) B) and C)
F) B) and D)

Question 8

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of demand for X is unitary (coefficient = 1) .If the incidence of the tax is such that the producers of X pay $1.75 of the tax and the consumers pay $.25,we can conclude that the:

Accepted Answer

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

Question 9

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

Question 10

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 11

In determining one's personal income tax,taxable income is:

Accepted Answer

A)   total income less deductions and exemptions.
B)   all income.
C)   all income other than wages and salaries.
D)   wage and salary income only.E) A) and B)
F) All of the above

Question 12

Approximately what percentage of the U.S.labor force works for U.S.governments at the federal,state,and local levels (as of 2011) ?

Accepted Answer

A)   8.
B)   13.
C)   16.
D)   22.E) A) and D)
F) B) and C) C

Question 13

The property tax may be regressive even though wealthy people own much more taxable property than do poor people.This possibility arises because:

Accepted Answer

A)   marginal and average tax rates on property tend to converge.
B)   wealthy people can evade property taxes while poor people cannot.
C)   property taxes on rental property and business property are shifted.
D)   statutory property tax rates decline as the value of property rises.E) B) and C)
F) B) and D)

Question 14

Approximately what percentage of the federal government's tax revenues are generated from personal income taxes (in 2012) ?

Accepted Answer

A)   85 percent.
B)   18 percent.
C)   35 percent.
D)   46 percent.E) A) and B)
F) None of the above

Question 15

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

Question 16

One difference between sales and excise taxes is that:

Accepted Answer

A)   sales taxes are only applied at the state level,while excise taxes are only applied at the federal level.
B)   excise taxes apply to a wide range of products,while sales taxes apply only to a select list of products.
C)   sales taxes are calculated as a percentage of the price paid,while excise taxes are levied on a per-unit basis.
D)   excise taxes are calculated as a percentage of the price paid,while sales taxes are levied on a per-unit basis.E) A) and C)
F) All of the above

Question 17

Taxable income is:

Accepted Answer

A)   total income less deductions and exemptions.
B)   the same as gross income.
C)   the only income to which marginal tax rates apply.
D)   the sum of all wage and property income.E) A) and C)
F) B) and C)

Question 18

Answer the question on the basis of the following demand and supply data for a competitive market:   Quantity Demanded  Price 1,500$102,00092,50083,00073,5006Quantity Supplied3,5003,0002,5002,0001,500\begin{array}{c}\begin{array}{ccc}	ext { Quantity Demanded } &  	ext { Price } \\hline1,500 & \$ 10 \2,000 & 9 \2,500 & 8 \3,000 &  7 \3,500 &  6\\end{array}\begin{array}{c}	ext{Quantity Supplied}\\hline3,500 \3,000 \2,500 \2,000 \1,500\end{array}\end{array} Quantity Demanded 1,5002,0002,5003,0003,500​ Price $109876​​Quantity Supplied3,5003,0002,5002,0001,500​​​  Refer to the given data.If government levies a per-unit excise tax of $1 on suppliers of this product,equilibrium price and quantity will be:

Accepted Answer

A)   $9 and 3,000.
B)   $7.50 and 2,250.
C)   $8.50 and 2,250.
D)   $7 and 3,000. E) A) and C)
F) A) and B) C

Question 19

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 coffee.E) All of the above
F) B) and C)

Question 20

(Last Word) Which of the following statements about taxes and government spending is correct?

Accepted Answer

A)   Despite the overall progressive tax system,government expenditures disproportionately favor the rich and result in a system that is slightly regressive.
B)   The progressive tax system is almost perfectly offset by regressive expenditures,making the overall system proportional.
C)   The regressive tax system is offset by expenditures directed toward lower-income households,making the overall system proportional.
D)   The overall system of taxes and spending is progressive,as over $1 trillion per year gets transferred from upper-income households to lower- and middle-income households.E) B) and C)
F) All of the above

Exam 19: Public Finance: Expenditures and Taxes

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

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

The federal income tax is consistent with the principle of taxation,whereas an excise tax on sporting event tickets is consistent with the _ principle of taxation.

Correct Answer
verified

(Last Word) For each dollar paid in taxes,approximately how much do households in the top quintile receive back in the form of government expenditures?

Correct Answer
verified

Taxes on commodities or on purchases are known as:

Correct Answer
verified
B

The sales tax is a regressive tax because the:

Correct Answer
verified

The main difference between sales and excise taxes is that:

Correct Answer
verified

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of demand for X is unitary (coefficient = 1) .If the incidence of the tax is such that the producers of X pay $1.75 of the tax and the consumers pay $.25,we can conclude that the:

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

In determining one's personal income tax,taxable income is:

Correct Answer
verified

Approximately what percentage of the U.S.labor force works for U.S.governments at the federal,state,and local levels (as of 2011) ?

Correct Answer
verified
C

The property tax may be regressive even though wealthy people own much more taxable property than do poor people.This possibility arises because:

Correct Answer
verified

Approximately what percentage of the federal government's tax revenues are generated from personal income taxes (in 2012) ?

Correct Answer
verified

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 Answer
verified

One difference between sales and excise taxes is that:

Correct Answer
verified

Taxable income is:

Correct Answer
verified

Correct Answer
verified
C

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

Correct Answer
verified

(Last Word) Which of the following statements about taxes and government spending is correct?

Correct Answer
verified

Exam 19: Public Finance: Expenditures and Taxes

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

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

The federal income tax is consistent with the __________ principle of taxation,whereas an excise tax on sporting event tickets is consistent with the ___________ principle of taxation.

Correct AnswerverifiedShow Answer

(Last Word) For each dollar paid in taxes,approximately how much do households in the top quintile receive back in the form of government expenditures?

Correct AnswerverifiedShow Answer

Taxes on commodities or on purchases are known as:

Correct AnswerverifiedB

The sales tax is a regressive tax because the:

Correct AnswerverifiedShow Answer

The main difference between sales and excise taxes is that:

Correct AnswerverifiedShow Answer

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of demand for X is unitary (coefficient = 1) .If the incidence of the tax is such that the producers of X pay $1.75 of the tax and the consumers pay $.25,we can conclude that the:

Correct AnswerverifiedShow Answer

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

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

In determining one's personal income tax,taxable income is:

Correct AnswerverifiedShow Answer

Approximately what percentage of the U.S.labor force works for U.S.governments at the federal,state,and local levels (as of 2011) ?

Correct AnswerverifiedC

The property tax may be regressive even though wealthy people own much more taxable property than do poor people.This possibility arises because:

Correct AnswerverifiedShow Answer

Approximately what percentage of the federal government's tax revenues are generated from personal income taxes (in 2012) ?

Correct AnswerverifiedShow Answer

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

One difference between sales and excise taxes is that:

Correct AnswerverifiedShow Answer

Taxable income is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

(Last Word) Which of the following statements about taxes and government spending is correct?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

The federal income tax is consistent with the principle of taxation,whereas an excise tax on sporting event tickets is consistent with the _ principle of taxation.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified