Quiz 20: Taxation and the Public Budget
Business
Q 1Q 1
One reason governments impose taxes is to:
A) raise government revenues.
B) increase consumer spending.
C) spur economic growth.
D) encourage more production.
Free
Multiple Choice
A
Q 2Q 2
One of the primary aims of taxation is:
A) to increase government revenues.
B) to reduce the equilibrium quantity.
C) to alter the incentives of market participants.
D) All of these are primary goals of taxation.
Free
Multiple Choice
D
Q 3Q 3
Many tax-funded programs are intended to:
A) decrease surplus.
B) increase income inequality.
C) provide basic human needs.
D) fail due to underfunding.
Free
Multiple Choice
C
Q 4Q 4
Which of the following is not an example of a commonly tax-funded program?
A) Public education.
B) Highways.
C) Housing to those in need.
D) Oil and gas production.
Free
Multiple Choice
Q 5Q 5
An example of a tax-funded program primarily intended to stimulate economic growth is the:
A) maintenance of public highways.
B) provision of housing to those in need.
C) provision of basic healthcare.
D) provision of national defense.
Free
Multiple Choice
Q 6Q 6
An example of a tax-funded program intended to provide basic human needs is the provision of:
A) public education.
B) police protection.
C) health care.
D) national defense.
Free
Multiple Choice
Q 7Q 7
In deciding which programs the government should fund with tax revenues there is:
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.
Free
Multiple Choice
Q 8Q 8
Taxes change behavior for all of the following reasons except they:
A) alter the incentives faced by market participants.
B) drive a wedge between the price paid by buyers and the price received by sellers.
C) result in a lower equilibrium quantity of the good or service being consumed.
D) increase consumer and producer surplus experienced at market.
Free
Multiple Choice
Q 9Q 9
When a tax is present in a market,the price paid by consumers:
A) equals that received by suppliers, but it is higher than the market price in the absence of taxes.
B) is greater than that received by suppliers.
C) is less than that received by suppliers.
D) equals that received by suppliers, but it is lower than the market price in the absence of taxes.
Free
Multiple Choice
Q 10Q 10
An example of a tax specifically designed to reduce consumption of a good is a tax on:
A) chocolate.
B) cigarettes.
C) coffee.
D) automobiles.
Free
Multiple Choice
Q 11Q 11
An example of a tax specifically designed to reduce consumption of a good is a tax on:
A) automobiles.
B) dairy products.
C) gasoline.
D) fast food.
Free
Multiple Choice
Q 12Q 12
The primary intent of the tax on tobacco is to:
A) reduce its consumption.
B) raise government revenues.
C) increase market surplus.
D) support producers of tobacco.
Free
Multiple Choice
Q 13Q 13
When a tax alters consumers' incentives,it is:
A) always the explicit purpose of the policy.
B) sometimes a side effect of a tax designed to raise revenue.
C) called a sin tax.
D) meant to encourage increased consumption.
Free
Multiple Choice
Q 14Q 14
This graph depicts a tax being imposed,causing demand to shift from D1 to D2.According to the graph shown,the tax caused:
A) positive government revenue and decreased consumption.
B) zero government revenue and decreased consumption.
C) a transfer of revenue to surplus and increased consumption.
D) positive government revenue and increased consumption.
Free
Multiple Choice
Q 15Q 15
This graph depicts a tax being imposed,causing demand to shift from D1 to D2.According to the graph shown,the tax caused:
A) an increase in consumption from Q1 to Q2.
B) a decrease in consumption from Q2 to Q1.
C) a decrease in the price consumers pay from P3 to P1.
D) a decrease in the price the suppliers receive from P3 to P1.
Free
Multiple Choice
Q 16Q 16
This graph depicts a tax being imposed,causing demand to shift from D1 to D2.The amount of the tax imposed in the graph shown is equal to:
A) (P1 P3).
B) (P2 P1).
C) (P4 P2).
D) (P4 P3).
Free
Multiple Choice
Q 17Q 17
This graph depicts a tax being imposed,causing demand to shift from D1 to D2.The amount of tax revenue being generated by the tax imposed in the graph shown is:
A) area P2CAP4.
B) area P1DBP3.
C) area ABC.
D) area ABCD.
Free
Multiple Choice
Q 18Q 18
This graph depicts a tax being imposed,causing demand to shift from D1 to D2.The deadweight loss associated with the tax imposed in the graph shown is:
A) equal to area CBD.
B) equal to area ABC.
C) due to the decrease in consumption from Q1 to Q2.
D) equal to area P1DCP2.
Free
Multiple Choice
Q 19Q 19
This graph depicts a tax being imposed,causing demand to shift from D1 to D2.The distance AC in the graph shown represents all of the following except the:
A) amount of the tax.
B) difference between what the consumer pays and what the seller receives.
C) "tax wedge."
D) total tax revenue generated for the government by imposing the tax.
Free
Multiple Choice
Q 20Q 20
Concepts useful in evaluating the costs and benefits of alternative types of taxes are:
A) efficiency, incidence and scarcity.
B) revenue, scarcity, and shortage.
C) incidence, scarcity, and shortage.
D) efficiency, revenue and incidence.
Free
Multiple Choice
Q 21Q 21
One cost associated with the imposition of taxes is:
A) deadweight loss.
B) scarcity.
C) shortages.
D) overconsumption.
Free
Multiple Choice
Q 22Q 22
One cost associated with taxes is the: A redistribution of surplus.
A) redistribution of surplus.
B) resulting under consumption.
C) administrative burden.
D) change in relative values.
Free
Multiple Choice
Q 23Q 23
The difference between the loss of surplus to taxpayers and the tax revenue collected is called:
A) an externality.
B) deadweight loss.
C) consumer surplus.
D) producer surplus.
Free
Multiple Choice
Q 24Q 24
The effort to collect and manage revenue from taxes is called:
A) an externality.
B) deadweight loss.
C) administrative burden.
D) transfer of surplus.
Free
Multiple Choice
Q 25Q 25
A tax in an efficient market:
A) increases efficiency.
B) decreases total surplus.
C) maximizes total surplus.
D) often fails to generate revenue.
Free
Multiple Choice
Q 26Q 26
Deadweight loss as a result of taxation occurs because the:
A) quantity of a good that is bought and sold is above the market equilibrium quantity.
B) price that is charged to the consumer is lower than the price the seller receives.
C) price that is charged to the consumer is above the market equilibrium quantity.
D) quantity of a good that is bought and sold is below the market equilibrium quantity.
Free
Multiple Choice
Q 27Q 27
The total amount of surplus lost due to taxation is:
A) greater than the amount of revenue generated.
B) less than the amount of revenue generated.
C) transferred to the government in the form of tax revenues.
D) used to fund public services.
Free
Multiple Choice
Q 28Q 28
Part of the surplus lost to market participants when a tax is imposed is:
A) transferred to others who are affected.
B) transferred to the government in revenues.
C) redistributed from seller to buyer.
D) redistributed from buyer to seller.
Free
Multiple Choice
Q 29Q 29
When a tax is imposed,the surplus that is lost to buyers and sellers but converted into tax revenue is:
A) considered a cost of taxation.
B) part of deadweight loss.
C) the sole source of deadweight loss.
D) not part of deadweight loss.
Free
Multiple Choice
Q 30Q 30
When a tax is imposed,the surplus that is lost to buyers and sellers but converted into tax revenue is:
A) transferred to others through public programs.
B) lost and considered a cost of taxation.
C) part of deadweight loss.
D) All of these statements are true.
Free
Multiple Choice
Q 31Q 31
The surplus that is lost and not converted to tax revenue when a tax is imposed is:
A) deadweight loss.
B) value that disappears.
C) not transferred to anyone else.
D) All of these statements are true.
Free
Multiple Choice
Q 32Q 32
When a tax is imposed,some of the lost surplus becomes tax revenues and the rest is:
A) transferred to consumers.
B) transferred to producers.
C) transferred to recipients of government services.
D) simply lost.
Free
Multiple Choice
Q 33Q 33
When a tax is imposed and some of the lost surplus becomes tax revenues,the group that benefits is:
A) consumers.
B) producers.
C) recipients of government services.
D) Only the government benefits from that lost surplus.
Free
Multiple Choice
Q 34Q 34
How much deadweight loss a tax causes is primarily determined by:
A) how responsive buyers and sellers are to a price change.
B) how much tax revenue the government generates.
C) whether the tax is imposed on the buyer or seller.
D) the ability of the government to impose the tax.
Free
Multiple Choice
Q 35Q 35
The deadweight loss a tax causes depends on all of the following except:
A) how responsive buyers and sellers are to a price change.
B) the price elasticity of supply.
C) the price elasticity of demand.
D) who the tax is imposed upon.
Free
Multiple Choice
Q 36Q 36
Considering a given increase in price due to a tax,the more price elastic the supply curve is,the:
A) larger the drop in equilibrium quantity.
B) smaller the drop in equilibrium quantity.
C) smaller the amount of deadweight loss created.
D) less surplus that is transferred to consumers.
Free
Multiple Choice
Q 37Q 37
Considering a given increase in price due to a tax,the less price elastic the demand curve is,the:
A) larger the drop in equilibrium quantity.
B) smaller the amount of deadweight loss created.
C) larger the amount of deadweight loss created.
D) more surplus that is transferred to consumers.
Free
Multiple Choice
Q 38Q 38
In order to minimize deadweight loss generated by taxation,a tax should be placed on goods that are:
A) price elastic.
B) price inelastic.
C) expensive.
D) popular.
Free
Multiple Choice
Q 39Q 39
Deadweight loss is minimized when a tax is levied on something for which people:
A) are not likely to change their behavior much in response to a price change.
B) are very likely to change their behavior in response to a price change.
C) have a large income elasticity of demand.
D) have a small income elasticity of demand.
Free
Multiple Choice
Q 40Q 40
A lump-sum tax:
A) charges the same amount to each taxpayer, regardless of economic behavior or circumstances.
B) refers to annual, rather than quarterly tax payments throughout the year.
C) is tied to spending habits, not income levels.
D) is tied to income levels, not spending habits.
Free
Multiple Choice
Q 41Q 41
An example of a lump-sum tax is a(n):
A) income tax.
B) property tax.
C) sales tax.
D) head tax.
Free
Multiple Choice
Q 42Q 42
A lump-sum tax is:
A) a head tax.
B) the most efficient form of taxation.
C) a tax that charges the same amount to each taxpayer.
D) All of these statements are true.
Free
Multiple Choice
Q 43Q 43
If the primary goal in implementing a tax is to maximize efficiency and minimize deadweight loss,the government should impose a(n):
A) income tax.
B) lump sum tax.
C) sin tax.
D) proportional tax.
Free
Multiple Choice
Q 44Q 44
In the real world,lump-sum taxes are:
A) rarely used.
B) commonly used.
C) applied only to the wealthy in the U.S.
D) very common in non-western nations.
Free
Multiple Choice
Q 45Q 45
In the real world,lump-sum taxes are:
A) perceived as unfair.
B) rarely used.
C) very efficient.
D) All of these statements are true.
Free
Multiple Choice
Q 46Q 46
Lump-sum taxes reduce the total amount of revenue that can be raised because:
A) people perceive them to be unfair.
B) they have large administrative burdens.
C) the size of the tax is limited by the poorest citizens' ability to pay.
D) they are often applied inefficiently.
Free
Multiple Choice
Q 47Q 47
All taxes carry which of the following costs?
A) Time in creating procedures for collecting revenues
B) Enforcing tax payments
C) Managing collected funds
D) All taxes incur all of these costs.
Free
Multiple Choice
Q 48Q 48
The administrative burden of taxes is:
A) smallest with a lump-sum tax.
B) the same if the revenue generated is the same for any kind of tax.
C) smaller the larger the amount of the tax.
D) the same across all types of taxes.
Free
Multiple Choice
Q 49Q 49
The logistical costs associated with implementing a tax are called the:
A) deadweight loss.
B) administrative burden.
C) total surplus.
D) tax revenue.
Free
Multiple Choice
Q 50Q 50
The administrative burden of a tax is:
A) the difference between the revenues generated from the tax and the cost of the government program it is supposed to fund.
B) what portion of the revenues come from the government.
C) what portion of the revenues come from the producers versus the consumers.
D) the logistical costs associated with implementing a tax.
Free
Multiple Choice
Q 51Q 51
In general,more efficient taxes have:
A) lower administrative burdens.
B) more complexity.
C) lower revenues given the size of the tax.
D) All of these statements are true.
Free
Multiple Choice
Q 52Q 52
In general,the more complex the tax the:
A) more tax revenues it will generate.
B) more efficient it will be.
C) higher the administrative burden will be.
D) more deadweight loss it will create.
Free
Multiple Choice
Q 53Q 53
The federal income tax _______________ compared to a state sales tax.
A) has a higher administrative burden
B) has a lower administrative burden
C) is less complex
D) is administered basically the same as
Free
Multiple Choice
Q 54Q 54
The federal income tax _____________ compared to a state sales tax.
A) has a lower administrative burden
B) is less efficient
C) is less complex
D) is easier to administer
Free
Multiple Choice
Q 55Q 55
To calculate tax revenue:
A) divide total revenues by the tax per unit.
B) multiply total revenues by the tax per unit.
C) multiply the tax per unit by the number of units of the item being taxed.
D) multiply the tax per unit by the price of the unit being taxed.
Free
Multiple Choice
Q 56Q 56
A new toll of $0.50 per car is in place on a bridge,and 1,000 cars have used the bridge.Total tax revenues would be:
A) $500.
B) $2,000.
C) $1,000.
D) $5,000
Free
Multiple Choice
Q 57Q 57
A bridge that typically gets 1,000 cars per day is installing a new toll next week of $0.50 per car.The tax revenues generated will be:
A) $1,000.
B) $500.
C) less than $500.
D) between $500 and $1,000.
Free
Multiple Choice
Q 58Q 58
Imposing taxes in markets where demand and supply are price inelastic:
A) causes less inefficiency than imposing them in price-elastic markets.
B) causes more inefficiency than imposing them in price-elastic markets.
C) causes no inefficiency.
D) cause the same amount of inefficiency because efficiency is unrelated to market elasticity.
Free
Multiple Choice
Q 59Q 59
For any given tax,the revenue generated is:
A) larger in markets with price-elastic demand and supply.
B) the same regardless of price elasticity.
C) always maximized in markets with price-elastic demand and supply.
D) smaller in markets with price-elastic demand and supply.
Free
Multiple Choice
Q 60Q 60
For any given tax,imposing a tax in a market with a highly inelastic demand will:
A) cause more deadweight loss than a market with an elastic demand.
B) generate higher revenues than a market with an elastic demand.
C) Both of these statements are true.
D) Neither of these statements is true.
Free
Multiple Choice
Q 61Q 61
The market for cigarettes likely has a:
A) highly elastic demand.
B) slightly elastic demand.
C) highly inelastic demand.
D) slightly inelastic demand.
Free
Multiple Choice
Q 62Q 62
Taxing the market for alcohol at the same rate as the market for juice will likely:
A) raise more revenue.
B) cause more inefficiency.
C) cause a very big reaction in terms of decreased quantity demanded.
D) produce very similar results in terms of revenue and inefficiency because the rate is the same.
Free
Multiple Choice
Q 63Q 63
When raising taxes,the price effect tells us that the:
A) higher tax rate causes fewer units to be sold.
B) government gets more revenue per units sold.
C) government gets less revenue per unit sold.
D) higher tax rate causes more units to be supplied.
Free
Multiple Choice
Q 64Q 64
When raising taxes,the quantity effect tells us that the:
A) government gets more revenue per units sold.
B) higher tax rate causes fewer units to be sold.
C) government gets less revenue per unit sold.
D) higher tax rate causes more units to be supplied.
Free
Multiple Choice
Q 65Q 65
The _____________ tells us when the government raises taxes,it gets more revenue per unit sold.
A) quantity effect
B) income effect
C) price effect
D) substitution effect
Free
Multiple Choice
Q 66Q 66
The __________ tells us when the government raises taxes,the higher tax rate causes fewer units to be sold.
A) quantity effect
B) price effect
C) government spending effect
D) quality effect
Free
Multiple Choice
Q 67Q 67
It is more likely at lower tax rates than higher tax rates that the:
A) quantity effect will outweigh the price effect.
B) quantity effect will outweigh the income effect.
C) price effect will outweigh the quantity effect.
D) income effect will outweigh the price effect.
Free
Multiple Choice
Q 68Q 68
In general,raising taxes has:
A) increasing returns to revenue.
B) diminishing returns to revenue.
C) increasing then decreasing returns to revenue.
D) constant returns to revenue.
Free
Multiple Choice
Q 69Q 69
If the price effect outweighs the quantity effect,then a tax:
A) increase will raise revenue.
B) decrease will raise revenue.
C) increase will lower revenue.
D) increase will not change revenue.
Free
Multiple Choice
Q 70Q 70
If the ________ effect is greater than the ___________ effect,a tax cut will increase revenues.
A) price; quantity
B) quantity; income
C) income; price
D) quantity; price
Free
Multiple Choice
Q 71Q 71
A $0.50 tax on lemons currently generates $200 in revenues per day.If the tax were increased to $2,the revenues generated would drop to $70.This tells you that in this range of tax rates the:
A) quantity effect outweighs the price effect.
B) quantity effect outweighs the income effect.
C) price effect outweighs the quantity effect.
D) price effect outweighs the income effect.
Free
Multiple Choice
Q 72Q 72
Raising taxes:
A) always raises tax revenues.
B) always decreases tax revenues.
C) can sometimes decrease tax revenues.
D) None of these statements is true.
Free
Multiple Choice
Q 73Q 73
When considering different tax levels,the revenue-maximizing point will be reached more:
A) slowly when demand is more elastic.
B) quickly when demand is more elastic.
C) quickly when demand is less elastic.
D) quickly if demand is unit elastic.
Free
Multiple Choice
Q 74Q 74
When considering the interplay of the price and quantity effect of different tax levels,we realize that:
A) there is one tax level that maximizes tax revenues.
B) tax revenues will continue to increase at all levels where the price effect outweighs the quantity effect.
C) tax revenues will continue to decrease at all levels where the quantity effect outweighs the price effect.
D) All of these statements are true.
Free
Multiple Choice
Q 75Q 75
The Laffer curve demonstrates that raising tax rates:
A) increases then decreases tax revenues.
B) always increases tax revenues.
C) always decreases tax revenues.
D) decreases then increases tax revenues.
Free
Multiple Choice
Q 76Q 76
The idea that people change their behavior in response to taxes is
A) highly controversial among economists.
B) accepted by economists, but debated by those in Congress.
C) uncontroversial among economists.
D) None of these statements is true.
Free
Multiple Choice
Q 77Q 77
The question of how people's behavior changes in response to taxes:
A) has been studied and is well known today.
B) is the subject of much research.
C) was generally accepted and has recently come under examination again.
D) None of these statements is true.
Free
Multiple Choice
Q 78Q 78
Most research suggests that the elasticity of the labor supply with respect to taxes is:
A) very low for most people.
B) very high for most people.
C) highly variable across people.
D) unpredictable in most settings.
Free
Multiple Choice
Q 79Q 79
When tax rates fall,people tend to:
A) increase the amount they work a great deal.
B) hardly increase the amount they work.
C) hardly decrease the amount they work.
D) decrease the amount they work, although to what degree is still being researched.
Free
Multiple Choice
Q 80Q 80
Research shows that people rearrange their income from different sources to reduce their:
A) tax rate.
B) necessary work hours.
C) total bill.
D) tax burden.
Free
Multiple Choice
Q 81Q 81
The tax rate that maximizes the government's revenues is:
A) not always the level that is "best" for the economy.
B) the level that is "best" for the economy.
C) 30 percent.
D) 85 percent.
Free
Multiple Choice
Q 82Q 82
The concept of incidence is used to:
A) indicate which tax bears the bigger burden.
B) describe unexpected tax revenue generated.
C) describe who bears the burden of a tax.
D) describe how often people are taxed.
Free
Multiple Choice
Q 83Q 83
We can describe who bears the burden of a tax by using the concept of:
A) marginal burden.
B) incidence.
C) payee.
D) marginal tax rate.
Free
Multiple Choice
Q 84Q 84
The burden a tax places on buyers versus sellers is:
A) independent of which side is charged the tax.
B) always split in half.
C) never shared.
D) depends on which side is charged with the tax.
Free
Multiple Choice
Q 85Q 85
The burden of a tax placed on buyers is:
A) shared between buyers and sellers.
B) the buyers' incidence.
C) the sellers' incidence.
D) higher if the tax is placed on buyers.
Free
Multiple Choice
Q 86Q 86
When a tax is placed on sellers,the actual incidence:
A) falls solely on the seller.
B) falls solely on the buyer.
C) may be shared between the seller and buyer.
D) is higher because it is being placed on the seller.
Free
Multiple Choice
Q 87Q 87
The statutory incidence of the tax means who:
A) is legally obligated to pay the tax to the government.
B) actually loses surplus as a result of the tax.
C) bears the burden of any sort of tax.
D) gains surplus as a result of the government redistributing tax revenue.
Free
Multiple Choice
Q 88Q 88
The economic incidence of the tax means who:
A) is legally obligated to pay the tax to the government.
B) actually loses more surplus as a result of the tax.
C) benefits the most from of any sort of tax.
D) gains surplus as a result of the government redistributing tax revenue.
Free
Multiple Choice
Q 89Q 89
The statutory incidence of a tax ______________ the economic incidence of the tax.
A) determines
B) often can predict
C) is the same as
D) has no effect on
Free
Multiple Choice
Q 90Q 90
The side of the market that is more inelastic:
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.
Free
Multiple Choice
Q 91Q 91
The side of the market that will bear a greater share of the tax burden is the side that:
A) responds more to a change in prices.
B) is more inelastic.
C) changes quantity by a larger percentage when the price changes by a given percentage.
D) bears the statutory burden of the tax.
Free
Multiple Choice
Q 92Q 92
When policy makers are deciding where to place the statutory incidence of a tax,it is helpful to remember that:
A) it will have no effect on the economic incidence of the tax.
B) the economic incidence will fall to the more-elastic party.
C) it will largely determine the economic incidence of the tax.
D) it will have a large impact on efficiency of the tax.
Free
Multiple Choice
Q 93Q 93
Policymakers have the ability to affect:
A) the economic incidence of a tax burden on the buyer and seller.
B) the relative economic incidence of the tax burden on the rich and the poor.
C) whether the buyer or seller will bear the actual burden of the tax.
D) how the tax is shared between buyer and seller.
Free
Multiple Choice
Q 94Q 94
Taxes are generally classified into these three categories:
A) progressive, regressive, lump-sum
B) progressive, regressive, proportional
C) proportional, flat tax, gradual
D) gradual, proportional, progressive
Free
Multiple Choice
Q 95Q 95
Which of the following is not one of the general classifications of taxes?
A) Regressive.
B) Progressive.
C) Proportional.
D) Gradual.
Free
Multiple Choice
Q 96Q 96
A proportional tax:
A) takes the same percentage of taxes from income from all taxpayers.
B) requires those with low incomes to pay a smaller percentage of their income than high-income people.
C) is levied so that low-income taxpayers pay a greater proportion of their income toward taxes than high-income taxpayers.
D) taxes everyone the same amount, regardless of their income.
Free
Multiple Choice
Q 97Q 97
A progressive tax:
A) takes the same percentage of taxes from income from all taxpayers.
B) requires those with low incomes to pay a smaller percentage of their income than high-income people.
C) is levied so that low-income taxpayers pay a greater proportion of their income toward taxes than high-income taxpayers.
D) taxes everyone the same amount, regardless of their income.
Free
Multiple Choice
Q 98Q 98
A lump-sum tax:
A) takes the same percentage of taxes from income from all taxpayers.
B) requires those with low incomes to pay a smaller percentage of their income than high-income people.
C) is levied so that low-income taxpayers pay a greater proportion of their income toward taxes than high-income taxpayers.
D) taxes everyone the same amount, regardless of their income.
Free
Multiple Choice
Q 99Q 99
A flat tax:
A) takes the same percentage of taxes from income from all taxpayers.
B) requires those with low incomes to pay a smaller percentage of their income than high-income people.
C) is levied so that low-income taxpayers pay a greater proportion of their income toward taxes than high-income taxpayers.
D) taxes everyone the same amount, regardless of their income.
Free
Multiple Choice
Q 100Q 100
A regressive tax:
A) takes the same percentage of taxes from income from all taxpayers.
B) requires those with low incomes to pay a smaller percentage of their income than high-income people.
C) is levied so that low-income taxpayers pay a greater proportion of their income toward taxes than high-income taxpayers.
D) taxes everyone the same amount, regardless of their income.
Free
Multiple Choice
Q 101Q 101
A tax that takes the same percentage of tax from all taxpayers is called a:
A) progressive tax.
B) regressive tax.
C) flat tax.
D) lump-sum tax.
Free
Multiple Choice
Q 102Q 102
A tax that takes the same percentage of tax from all taxpayers is called a:
A) proportional tax.
B) progressive tax.
C) regressive tax.
D) lump-sum tax.
Free
Multiple Choice
Q 103Q 103
A tax that requires those with low incomes to pay a smaller percentage of their income than high-income earners is a:
A) proportional tax.
B) progressive tax.
C) regressive tax.
D) flat tax.
Free
Multiple Choice
Q 104Q 104
A tax that is levied in such a way that low-income taxpayers pay a greater proportion of their income toward taxes than do high-income taxpayers is called a:
A) proportional tax.
B) progressive tax.
C) regressive tax.
D) flat tax.
Free
Multiple Choice
Q 105Q 105
If Bob earns $20,000 per year and Sue earns $100,000 a year,and there is a flat tax of 10 percent imposed,then Bob would pay __________,Sue would pay ___________,and this is a __________ tax.
A) $2,000; $10,000; proportional
B) $2,000; $10,000; progressive
C) $2,000; $10,000; lump-sum tax
D) $200; $1,000; flat tax
Free
Multiple Choice
Q 106Q 106
If Bob earns $20,000 a year and pays $2,000 in taxes,and Cindy earns $40,000 a year and pays $4,000 in taxes,there is a _______________ tax in place.
A) progressive
B) regressive
C) proportional
D) lump-sum
Free
Multiple Choice
Q 107Q 107
If Bob earns $20,000 a year and pays $2,000 in taxes,and Cindy earns $40,000 a year and pays $4,000 in taxes,then Bob's tax rate is _______ and Cindy's tax rate is_____.
A) 5%, 10%
B) 2%, 4%
C) 10%, 10%
D) 20%, 10%
Free
Multiple Choice
Q 108Q 108
If Janice earns $50,000 a year and pays $500 in taxes,and Cam earns $100,000 a year and pays $20,000 in taxes,the tax system must be:
A) regressive.
B) progressive.
C) proportional.
D) lump-sum.
Free
Multiple Choice
Q 109Q 109
If Janice earns $50,000 a year and pays $500 in taxes,and Cam earns $100,000 a year and pays $20,000 in taxes,then Janice's effective tax rate is _____ and Cam's effective tax rate is____.
A) 2%, 20%.
B) 5%, 20%.
C) 5%, 10%.
D) 10%, 10%.
Free
Multiple Choice
Q 110Q 110
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:
A) flat.
B) proportional.
C) progressive.
D) lump-sum.
Free
Multiple Choice
Q 111Q 111
One of the basic trade-offs inherent in designing a tax system is between:
A) surplus and revenues.
B) supply and demand.
C) efficiency and equity.
D) price and quantity.
Free
Multiple Choice
Q 112Q 112
In general,the most efficient taxes:
A) are often not the most equitable.
B) are often the most equitable.
C) raise the most revenues.
D) do not raise the most revenues.
Free
Multiple Choice
Q 113Q 113
In general,the more equitable the incidence of a tax system is the:
A) less complicated and more efficient is its design
B) more complicated and less efficient is its design.
C) more complicated and more efficient is its design.
D) less complicated and less efficient is its design.
Free
Multiple Choice
Q 114Q 114
Over 90 percent of the U.S.government's tax revenues come from:
A) two sources.
B) one single source.
C) three sources.
D) None of these is true.
Free
Multiple Choice
Q 115Q 115
The two sources that contribute roughly 80 percent together of total tax revenues are:
A) personal income tax and payroll tax.
B) personal income tax and corporate income tax.
C) corporate income tax and payroll tax.
D) personal income tax and excise tax.
Free
Multiple Choice
Q 116Q 116
The third largest source of government tax revenues that contributes roughly 10 percent to total revenues is:
A) payroll tax.
B) personal income tax.
C) corporate income tax.
D) excise tax.
Free
Multiple Choice
Q 117Q 117
An income tax is a tax:
A) charged on the earnings of individuals and corporations.
B) on income earned by buying investments and selling them at a higher price.
C) on the wages paid to an employee.
D) charged on the value of a good or service being purchased.
Free
Multiple Choice
Q 118Q 118
A capital gains tax is a tax on the:
A) earnings of individuals and corporations.
B) income earned by buying assets and selling them at a higher price.
C) wages paid to an employee.
D) value of a good or service being purchased.
Free
Multiple Choice
Q 119Q 119
A payroll tax is a tax on the:
A) earnings of individuals.
B) income earned by buying investments and selling them at a higher price.
C) wages paid to an employee.
D) value of a good or service being purchased.
Free
Multiple Choice
Q 120Q 120
A sales tax is a tax on the:
A) earnings of individuals and corporations.
B) income earned by buying investments and selling them at a higher price.
C) wages paid to an employee.
D) value of a good or service being purchased.
Free
Multiple Choice
Q 121Q 121
The largest source of income for most people is:
A) income from interest in savings accounts.
B) wages earned at work.
C) rental income from properties that they own.
D) investment income.
Free
Multiple Choice
Q 122Q 122
The marginal tax rate refers to the tax rate charged on the:
A) last dollar a taxpayer earns.
B) income earned from buying investments and selling them at a higher price.
C) earnings of individuals.
D) value of a good or service being purchased.
Free
Multiple Choice
Q 123Q 123
For a person earning $15,000,the marginal tax rate for the amount from 10,001 to $15,000 is:
A) 10%
B) 15%
C) 25%
D) 27.5%
Free
Multiple Choice
Free
Multiple Choice
Q 125Q 125
For a person earning $15,000,the marginal tax amount from 10,001 to $15,000 is:
A) $500
B) $750
C) $1,750
D) $2,000
Free
Multiple Choice
Q 126Q 126
For a person earning $75,000,the marginal tax rate for the amount from 10,001 to $15,000 is:
A) 10%
B) 15%
C) 25%
D) 27.5%
Free
Multiple Choice
Free
Multiple Choice
Q 128Q 128
For a person earning $75,000,the marginal tax amount from 10,001 to $15,000 is:
A) $500
B) $750
C) $1,750
D) $2,000
Free
Multiple Choice
Q 129Q 129
For a person earning $75000,the marginal tax amount from 40,001 to $75000 is:
A) $5,000
B) $7,500
C) $8,750
D) $14,250
Free
Multiple Choice
Q 130Q 130
The American individual income tax is:
A) progressive.
B) regressive.
C) proportional.
D) a lump sum.
Free
Multiple Choice
Q 131Q 131
A tax on individuals' earnings is called the:
A) payroll tax.
B) personal income tax.
C) corporate income tax.
D) excise tax.
Free
Multiple Choice
Q 132Q 132
A tax on the income earned by buying investments and selling them at a higher price is called the:
A) sales tax.
B) corporate income tax.
C) capital gains tax.
D) excise tax.
Free
Multiple Choice
Q 133Q 133
A tax on the wages paid to an employee is called the:
A) payroll tax.
B) personal income tax.
C) corporate income tax.
D) excise tax.
Free
Multiple Choice
Q 134Q 134
A tax on the value of a good or service being purchased is called the:
A) sales tax.
B) payroll tax.
C) personal income tax.
D) excise tax.
Free
Multiple Choice
Q 135Q 135
The taxes used to pay for Social Security and Medicare are:
A) income taxes.
B) sales taxes.
C) corporate income taxes.
D) payroll taxes.
Free
Multiple Choice
Q 136Q 136
The payroll tax and the income tax differ in that:
A) the employer pays the payroll tax, and the individual pays the income tax.
B) the payroll tax is tied directly to specific programs while the personal income tax goes toward general government revenue.
C) employers have to pay both payroll and corporate income taxes, and individuals only have to pay personal income tax.
D) the employer pays the payroll tax, but the income tax burden is shared between employer and employee.
Free
Multiple Choice
Q 137Q 137
The Social Security system pays:
A) current retirees from funds paid by current employees.
B) retirees the money accumulated from the payroll tax collected throughout their working lives.
C) current retirees from current general government revenues.
D) current retirees from general government revenue surpluses they contributed to through taxes.
Free
Multiple Choice
Q 138Q 138
FICA,the tax that supports Medicare and Social Security,is generally:
A) proportional.
B) progressive.
C) regressive.
D) a flat tax that adjusts with inflation.
Free
Multiple Choice
Q 139Q 139
While corporations bear the statutory incidence of corporate income tax,the economic incidence is likely borne by:
A) shareholders.
B) employees.
C) customers.
D) All of these likely bear some of the economic incidence.
Free
Multiple Choice
Q 140Q 140
Corporate taxes in the US are:
A) regressive.
B) proportional.
C) progressive.
D) a flat tax that adjusts with inflation.
Free
Multiple Choice
Q 141Q 141
A helpful way to put government revenues into context is to think about it:
A) as an average amount paid per taxpayer.
B) as a percentage of the country's GDP.
C) by comparing the percentage of a country's GDP collected in taxes to other countries' percentage of GDP.
D) All of these approaches can be helpful in understanding tax revenues.
Free
Multiple Choice
Q 142Q 142
Higher income countries tend to collect _____________ as a percentage of their GDP than do low-income countries.
A) greater tax revenues
B) smaller tax revenues
C) about the same in tax revenues
D) There is really no correlation between a country's wealth and the tax revenues it generates.
Free
Multiple Choice
Q 143Q 143
One interesting feature of federal government spending in the United States is that:
A) it has historically always been greater than the revenues generated.
B) little of it is discretionary.
C) the majority of it is discretionary.
D) it has historically always been less than the revenues generated, until the last 20 years.
Free
Multiple Choice
Q 144Q 144
Discretionary spending involves public expenditures that:
A) have to be approved each year.
B) are planned in the federal budget and do not need annual approval.
C) are mandated and regulated by permanent laws.
D) "entitle" people to benefits by virtue of age, income, or some other factor.
Free
Multiple Choice
Q 145Q 145
A public expenditure that has to be approved each year is called:
A) discretionary spending.
B) nondiscretionary spending.
C) entitlement spending.
D) earmarked spending.
Free
Multiple Choice
Q 146Q 146
Entitlement spending:
A) is public expenditure that is mandated and regulated by permanent laws.
B) rises and falls with the number of people who are eligible recipients.
C) cannot be reduced without changing the laws outlining eligibility.
D) All of these statements are true.
Free
Multiple Choice
Q 147Q 147
An example of entitlement spending is:
A) national defense.
B) Social Security.
C) police protection.
D) garbage collection.
Free
Multiple Choice
Q 148Q 148
When a government spends more than it earns in revenue,we say that it has a:
A) budget surplus.
B) budget deficit.
C) budget crisis.
D) federal debt.
Free
Multiple Choice
Q 149Q 149
When a government earns more than it spends in revenue,we say that it has a:
A) budget surplus.
B) budget deficit.
C) federal debt.
D) federal deficit.
Free
Multiple Choice
Q 150Q 150
Deficits and surpluses are commonly calculated as:
A) debt per taxpayer.
B) average debt per state.
C) a percentage of national GDP.
D) absolute values.
Free
Multiple Choice
Q 151Q 151
If the federal government brings in $1.1 trillion in tax revenues and spends $0.7 trillion,the government has a budget:
A) deficit of $0.4 trillion.
B) surplus of $0.4 trillion.
C) deficit of $1.8 trillion.
D) surplus of $1.1 trillion.
Free
Multiple Choice
Q 152Q 152
The federal debt is ____________ and the federal deficit is ______________.
A) the cumulative total of what the federal government owes; the amount the federal government overspent in a given year
B) the amount the federal government overspent in a year; the cumulative total of what the federal government owes
C) the total of what is projected to be spent in a given year; the total of what is projected to be earned in revenues in a given year
D) None of these statements is true.
Free
Multiple Choice
Q 153Q 153
If the federal government brings in $3 trillion in tax revenues and spends $4 trillion,the government has a budget:
A) surplus of $1 trillion.
B) deficit of $1 trillion.
C) surplus of $7 trillion.
D) deficit of $0.75 trillion.
Free
Multiple Choice
Q 154Q 154
It is difficult to balance the budget every year because:
A) political battles often cause blatant deficit spending that could be avoided.
B) while economic downturns are easy to predict, booms are not.
C) it is hard to get agreement on how to spend discretionary funds.
D) it is unlikely that revenues will exactly equal planned expenditures in any given year.
Free
Multiple Choice
Q 155Q 155
Instead of trying to balance the budget every year,it is easier to:
A) balance the budget over the business cycle.
B) allow deficit spending only in times of economic downturn.
C) allow surpluses to build during times of economic booms.
D) All of these statements are true.
Free
Multiple Choice
Q 156Q 156
During a time of an economic downturn,it is likely that projected tax revenues will be __________ than anticipated,and expenditures will be _______ than anticipated.
A) higher; higher
B) lower; lower
C) lower; higher
D) higher; lower
Free
Multiple Choice