Question 1

One cost associated with the imposition of taxes is:

Accepted Answer

A)  deadweight loss.
B)  scarcity.
C)  shortages.
D)  overconsumption.E) A) and B)
F) None of the above

Question 2

When a tax is imposed, some of the lost surplus is converted to tax revenue and the rest is:

Accepted Answer

A)  transferred to consumers.
B)  transferred to producers.
C)  transferred to recipients of government services.
D)  simply lost.E) A) and B)
F) C) and D)

Question 3

The table shown displays the marginal tax rates that correspond to each taxable income bracket for an individual.

What amount in taxes would a person with $125,000 of taxable income owe?

Accepted Answer

A)  $5,000
B)  $7,500
C)  $8,750
D)  $14,250E) None of the above
F) B) and C)

Question 4

The administrative burden of a tax is:

Accepted Answer

A)  the difference between the revenues generated from the tax and the cost of the government program it is supposed to fund.
B)  the portion of the revenues that come from the government.
C)  the portion of the revenues that come from the producers.
D)  the logistical costs associated with implementing the tax.E) A) and D)
F) A) and B)

Question 5

When a tax is placed on sellers, the economic incidence:

Accepted Answer

A)  falls solely on the seller.
B)  falls solely on the buyer.
C)  may be shared between the seller and buyer.
D)  is higher than the incidence of a tax placed on buyers.E) None of the above
F) All of the above

Question 6

A tax imposed in an otherwise efficient market:

Accepted Answer

A)  increases efficiency.
B)  decreases total surplus.
C)  maximizes total surplus.
D)  often fails to generate revenue.E) All of the above
F) None of the above

Question 7

The table shown displays the marginal tax rates that correspond to each taxable income bracket for an individual.

Consider two individuals: Nia and Sasha. Nia has $75,000 of taxable income and Sasha has $76,000 of taxable income. Which of the following statements is true?Sasha owes $4,000 more in taxes than Nia.Sasha owes $19,000 in taxes.Nia owes $13,500 in taxes.

Accepted Answer

A)  I and II only
B)  III only
C)  II only
D)  II and III onlyE) A) and C)
F) B) and D)

Question 8

A regressive tax:

Accepted Answer

A)  takes the same percentage from all taxpayers, regardless of income.
B)  requires those with low incomes to pay a smaller percentage of their income than high-income people.
C)  is levied such that low-income taxpayers pay a greater proportion of their income than high-income taxpayers.
D)  taxes everyone the same amount, regardless of income.E) C) and D)
F) All of the above

Question 9

How do the payroll tax and the income tax differ?

Accepted Answer

A)  Employers pay the payroll tax, whereas individuals pay 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 must pay both payroll and corporate income taxes, whereas individuals only have to pay personal income tax.
D)  Employers pay the payroll tax, but the income tax burden is shared between employers and employees.E) B) and C)
F) A) and C)

Question 10

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

Accepted Answer

A)  less inefficiency than in price elastic markets.
B)  more inefficiency than in price elastic markets.
C)  causes no inefficiency.
D)  cause the same amount of inefficiency as in price elastic markets.E) C) and D)
F) B) and D)

Question 11

What is the largest source of income for most people?

Accepted Answer

A)  Interest in savings accounts
B)  Wages earned at work
C)  Renting owned properties
D)  InvestmentsE) A) and B)
F) All of the above

Question 12

Suppose the government has imposed a $6 per unit tax in the market shown in the graph.  If the government raises the tax to $10 per unit:tax revenue will increase by $30,000.deadweight loss will increase by $16,000the quantity purchased will decrease by 2,000 units.

Accepted Answer

A)  I only
B)  II and III only
C)  I and III only
D)  I, II, and IIIE) B) and C)
F) C) and D)

Question 13

All taxes carry the cost of time spent:

Accepted Answer

A)  creating procedures for collecting revenues.
B)  enforcing tax payments.
C)  managing collected funds.
D)  All of these are costs incurred by taxes.E) A) and D)
F) B) and C)

Question 14

When a government earns more than it spends in revenue, we say that it has a:

Accepted Answer

A)  budget surplus.
B)  budget deficit.
C)  federal debt.
D)  federal deficit.E) All of the above
F) C) and D)

Question 15

If the government's primary goal is to maximize efficiency and minimize deadweight loss, it should impose a(n) :

Accepted Answer

A)  income tax.
B)  lump-sum tax.
C)  sin tax.
D)  proportional tax.E) All of the above
F) A) and B)

Question 16

A tax on which of the following is specifically designed to change individuals' behavior? Cigarettes Gasoline Income

Accepted Answer

A)  I only
B)  I and II only
C)  III only
D)  I, II, and IIIE) A) and B)
F) B) and C)

Question 17

The statutory incidence of a tax _______ the economic incidence of the tax.

Accepted Answer

A)  determines
B)  often can predict
C)  is the same as
D)  has no effect onE) A) and B)
F) A) and C)

Question 18

A tax that requires those with low incomes to pay a smaller percentage of their income than high-income earners is a:

Accepted Answer

A)  proportional tax.
B)  progressive tax.
C)  regressive tax.
D)  flat tax.E) None of the above
F) A) and B)

Question 19

It is difficult for a government to balance the budget every year because:

Accepted Answer

A)  political battles often cause blatant deficit spending that could be avoided.
B)  while economic downturns are easy to predict, booms are not.
C)  opposing parties rarely agree on how to spend discretionary funds.
D)  it is unlikely that revenues will exactly equal planned expenditures in any given year.E) A) and B)
F) All of the above

Question 20

The table shown displays the marginal tax rates that correspond to each taxable income bracket for an individual.

What amount in taxes would a person with $200,000 of taxable income owe?

Accepted Answer

A)  $64,000
B)  $69,900
C)  $117,900
D)  $46,300E) B) and C)
F) All of the above

Exam 20: Taxation and the Public Budget

All taxes carry the cost of time spent:

Correct Answer
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What is the largest source of income for most people?

Correct Answer
verified

Suppose the government has imposed a $6 per unit tax in the market shown in the graph. If the government raises the tax to $10 per unit:tax revenue will increase by $30,000.deadweight loss will increase by $16,000the quantity purchased will decrease by 2,000 units.

Correct Answer
verified

A regressive tax:

Correct Answer
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The table shown displays the marginal tax rates that correspond to each taxable income bracket for an individual. What amount in taxes would a person with $200,000 of taxable income owe?

Correct Answer
verified

The statutory incidence of a tax _______ the economic incidence of the tax.

Correct Answer
verified

Correct Answer
verified

If the government's primary goal is to maximize efficiency and minimize deadweight loss, it should impose a(n) :

Correct Answer
verified

The table shown displays the marginal tax rates that correspond to each taxable income bracket for an individual. What amount in taxes would a person with $125,000 of taxable income owe?

Correct Answer
verified

A tax imposed in an otherwise efficient market:

Correct Answer
verified

A tax on which of the following is specifically designed to change individuals' behavior? Cigarettes Gasoline Income

Correct Answer
verified

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

Correct Answer
verified

How do the payroll tax and the income tax differ?

Correct Answer
verified

A tax that requires those with low incomes to pay a smaller percentage of their income than high-income earners is a:

Correct Answer
verified

When a tax is placed on sellers, the economic incidence:

Correct Answer
verified

When a government earns more than it spends in revenue, we say that it has a:

Correct Answer
verified

It is difficult for a government to balance the budget every year because:

Correct Answer
verified

The administrative burden of a tax is:

Correct Answer
verified

When a tax is imposed, some of the lost surplus is converted to tax revenue and the rest is:

Correct Answer
verified

One cost associated with the imposition of taxes is:

Correct Answer
verified

Exam 20: Taxation and the Public Budget

All taxes carry the cost of time spent:

Correct AnswerverifiedShow Answer

What is the largest source of income for most people?

Correct AnswerverifiedShow Answer

Suppose the government has imposed a $6 per unit tax in the market shown in the graph. If the government raises the tax to $10 per unit:tax revenue will increase by $30,000.deadweight loss will increase by $16,000the quantity purchased will decrease by 2,000 units.

Correct AnswerverifiedShow Answer

A regressive tax:

Correct AnswerverifiedShow Answer

The table shown displays the marginal tax rates that correspond to each taxable income bracket for an individual. What amount in taxes would a person with $200,000 of taxable income owe?

Correct AnswerverifiedShow Answer

The statutory incidence of a tax _______ the economic incidence of the tax.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the government's primary goal is to maximize efficiency and minimize deadweight loss, it should impose a(n) :

Correct AnswerverifiedShow Answer

The table shown displays the marginal tax rates that correspond to each taxable income bracket for an individual. What amount in taxes would a person with $125,000 of taxable income owe?

Correct AnswerverifiedShow Answer

A tax imposed in an otherwise efficient market:

Correct AnswerverifiedShow Answer

A tax on which of the following is specifically designed to change individuals' behavior? Cigarettes Gasoline Income

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

How do the payroll tax and the income tax differ?

Correct AnswerverifiedShow Answer

A tax that requires those with low incomes to pay a smaller percentage of their income than high-income earners is a:

Correct AnswerverifiedShow Answer

When a tax is placed on sellers, the economic incidence:

Correct AnswerverifiedShow Answer

When a government earns more than it spends in revenue, we say that it has a:

Correct AnswerverifiedShow Answer

It is difficult for a government to balance the budget every year because:

Correct AnswerverifiedShow Answer

The administrative burden of a tax is:

Correct AnswerverifiedShow Answer

When a tax is imposed, some of the lost surplus is converted to tax revenue and the rest is:

Correct AnswerverifiedShow Answer

One cost associated with the imposition of taxes is:

Correct AnswerverifiedShow Answer

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