Question 1

A tax that takes the same percentage of tax from all taxpayers is called a:

Accepted Answer

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

Question 2

When raising taxes,the price effect tells us that:

Accepted Answer

A)  the government gets more revenue per units sold.
B)  the higher tax rate causes fewer units to be sold.
C)  the government gets less revenue per unit sold.
D)  the higher tax rate causes more units to be supplied.E) B) and C)
F) C) and D)

Question 3

The burden of a tax placed on buyers is:

Accepted Answer

A)  shared between buyers and sellers.
B)  the buyers' incidence.
C)  the sellers' incidence.
D)  always zero.E) B) and D)
F) A) and B)

Question 4

A capital gains tax is a tax on:

Accepted Answer

A)  the earnings of individuals and corporations.
B)  income earned by buying assets 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) None of the above
F) C) and D)

Question 5

Imposing taxes in markets where demand and supply are price inelastic:

Accepted Answer

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)  All taxes of the same amount cause the same amount of inefficiency regardless of market elasticity.E) A) and B)
F) All of the above

Question 6

The primary intent of the tax on tobacco is to:

Accepted Answer

A)  reduce its consumption.
B)  raise government revenues.
C)  increase surplus.
D)  None of these statements is true.E) A) and D)
F) B) and C)

Question 7

For any given tax,the revenue generated is:

Accepted Answer

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.E) A) and C)
F) None of the above

Question 8

Part of the surplus lost to market participants when a tax is imposed is:

Accepted Answer

A)  transferred to the government in revenues.
B)  transferred to others who are affected.
C)  redistributed from seller to buyer.
D)  None of these statements is true.E) B) and C)
F) A) and D)

Question 9

Taxes are generally classified into these three categories:

Accepted Answer

A)  progressive,regressive,lump-sum
B)  progressive,regressive,proportional
C)  proportional,flat tax,gradual
D)  gradual,proportional,progressiveE) None of the above
F) All of the above

Question 10

A progressive tax:

Accepted Answer

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 in such a way that low-income taxpayers pay a greater proportion of their income toward taxes than do high-income taxpayers.
D)  None of these statements is true.E) All of the above
F) B) and C)

Question 11

One interesting feature of federal government spending in the United States is that:

Accepted Answer

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.E) B) and D)
F) B) and C)

Question 12

The _____________ tells us when the government raises taxes,it gets more revenue per unit sold.

Accepted Answer

A)  price effect
B)  quantity effect
C)  income effect
D)  substitution effectE) A) and D)
F) B) and C)

Question 13

The effort to collect and manage revenue from taxes is called:

Accepted Answer

A)  an externality.
B)  deadweight loss.
C)  administrative burden.
D)  transfer of surplus.E) A) and D)
F) B) and C)

Question 14

The logistical costs associated with implementing a tax are called the:

Accepted Answer

A)  administrative burden.
B)  deadweight loss.
C)  total surplus.
D)  tax revenue.E) B) and D)
F) C) and D)

Question 15

In the real world,lump-sum taxes are:

Accepted Answer

A)  perceived as unfair.
B)  rarely used.
C)  very efficient.
D)  All of these statements are true.E) B) and D)
F) B) and C)

Question 16

For any given tax,imposing a tax in a market with a highly inelastic demand will:

Accepted Answer

A)  generate higher revenues than a market with an elastic demand.
B)  cause more deadweight loss than a market with an elastic demand.
C)  Both of these statements are true.
D)  Neither of these statements is true.E) C) and D)
F) None of the above

Question 17

The federal debt is ____________ and the federal deficit is ______________.

Accepted Answer

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.E) B) and D)
F) B) and C)

Question 18

When policy makers are deciding where to place the statutory incidence of a tax,it is helpful to remember that:

Accepted Answer

A)  it will have no effect on the economic incidence of the tax.
B)  the economic incidence will fall to the less-elastic party.
C)  they can do little to change the economic incidence of the tax.
D)  All of these statements are true.E) A) and B)
F) B) and C)

Question 19

The two sources that contribute roughly 40 percent each to total tax revenues are:

Accepted Answer

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.E) B) and C)
F) C) and D)

Question 20

The market for cigarettes likely has a:

Accepted Answer

A)  highly inelastic demand.
B)  highly elastic demand.
C)  slightly elastic demand.
D)  slightly inelastic demand.E) A) and D)
F) C) and D)

Exam 20: Taxation and the Public Budget

When raising taxes,the price effect tells us that:

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A progressive tax:

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The federal debt is ____________ and the federal deficit is ______________.

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When policy makers are deciding where to place the statutory incidence of a tax,it is helpful to remember that:

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The effort to collect and manage revenue from taxes is called:

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In the real world,lump-sum taxes are:

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The logistical costs associated with implementing a tax are called the:

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The primary intent of the tax on tobacco is to:

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The two sources that contribute roughly 40 percent each to total tax revenues are:

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Taxes are generally classified into these three categories:

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The burden of a tax placed on buyers is:

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Part of the surplus lost to market participants when a tax is imposed is:

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The market for cigarettes likely has a:

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One interesting feature of federal government spending in the United States is that:

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For any given tax,the revenue generated is:

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A capital gains tax is a tax on:

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The _____________ tells us when the government raises taxes,it gets more revenue per unit sold.

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Imposing taxes in markets where demand and supply are price inelastic:

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For any given tax,imposing a tax in a market with a highly inelastic demand will:

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A tax that takes the same percentage of tax from all taxpayers is called a:

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The federal debt is and the federal deficit is __.

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