Question 1

A progressive tax is one in which the fraction of income paid in taxes rises as a person's income increases.

Accepted Answer

A) True 
 B)False

Question 2

An excise tax on gasoline is regressive if

Accepted Answer

A)  rich people buy more gasoline than poor people.
B)  the demand for gasoline is elastic.
C)  the tax causes people to buy less gasoline.
D)  poor people spend a larger portion of their incomes on gasoline than rich people.E) None of the above
F) B) and D)

Question 3

If a tax is progressive, the average tax rate

Accepted Answer

A)  remains the same as income rises.
B)  rises as income rises.
C)  falls as income rises.
D)  falls with passage of time.E) C) and D)
F) None of the above

Question 4

Explain the concept of efficiency as it relates to taxation.

Accepted Answer

A tax is said to be efficient if it has ...

Question 5

Briefly and concisely define the following terms:
a.fiscal federalism
b.horizontal equity
c.vertical equity
d.benefits principle of taxation

Accepted Answer

a.Fiscal federalism is a system of inter...

Question 6

A comprehensive income tax with few loopholes is efficient because labor

Accepted Answer

A)  supply is very little affected by taxation.
B)  demand is very little affected by taxation.
C)  supply is highly responsive to taxation.
D)  demand is highly responsive to taxation.E) A) and C)
F) All of the above

Question 7

Economists generally think that the ____ tax is among the best ways to raise revenue.

Accepted Answer

A)  property 
B)  personal income 
C)  sales 
D)  value-addedE) B) and D)
F) All of the above

Question 8

If a tax is regressive, the average tax rate

Accepted Answer

A)  remains the same as income rises.
B)  rises as income rises.
C)  falls as income rises.
D)  falls as income falls.E) A) and D)
F) A) and C)

Question 9

Employers can shift payroll taxes by substituting capital for labor.

Accepted Answer

A) True 
 B)False

Question 10

The concept of vertical equity is that

Accepted Answer

A)  income should be taxed instead of property.
B)  property should be taxed instead of income.
C)  there should be little movement up or down the social scale.
D)  persons who are unequal should be treated unequally.E) B) and C)
F) A) and B)

Question 11

Figure 18-2
 
-Figure 18-2 shows the widget market before and after an excise tax is imposed.The tax per widget equals ____.

Accepted Answer

A)  $5 
B)  $20 
C)  $25 
D)  $30E) All of the above
F) A) and B)

Question 12

The system of grants from one level of government to another is an example of fiscal federalism.

Accepted Answer

A) True 
 B)False

Question 13

Michigan recently did away with property taxes.Alternative funding for schools could come from

Accepted Answer

A)  a lottery system.
B)  an increase in sales tax and income tax.
C)  an increase in corporate taxes.
D)  All of the above are correct.E) None of the above
F) C) and D)

Question 14

What is the flypaper theory of tax incidence?
 This theory is typically wrong.Why?

Accepted Answer

This is an axiom which maintains that th...

Question 15

Which of the following taxes is most likely to be shifted?

Accepted Answer

A)  a property tax on an owner-occupied residence 
B)  a progressive income tax 
C)  a flat-rate state income tax 
D)  a general sales taxE) None of the above
F) A) and B)

Question 16

An efficient tax is one that raises the desired tax revenue but creates the least possible

Accepted Answer

A)  total burden.
B)  excess burden.
C)  tax incidence.
D)  tax shifting.E) None of the above
F) All of the above

Question 17

The United States Social Security system

Accepted Answer

A)  pays benefits in direct accordance to what each individual has paid into the system.
B)  has paid the current generation of recipients less in benefits than it paid in payroll taxes.
C)  has paid the current generation of recipients more than it paid in payroll taxes.
D)  paid the earlier generations more and the current generation less than each paid in payroll taxes.E) A) and D)
F) None of the above

Question 18

Homeowners

Accepted Answer

A)  are subject to double taxation.
B)  benefit from several loopholes.
C)  have no particular advantages in the tax system.
D)  must pay tax on the "income" of living in a house.E) A) and D)
F) B) and D)

Question 19

Faced with a shortage of funds to pay claims, the workman's compensation systems in many states have been forced to raise the workman's compensation tax rate substantially.The tax is paid by employers.Employers have complained that they cannot afford the tax and threaten to go out of business.Assuming the supply of labor is very inelastic, one can argue that ultimately the burden of this tax actually will rest

Accepted Answer

A)  mostly on workers.
B)  mostly on employers.
C)  about 50/50 on workers and employers, like the Social Security tax.
D)  all on employers by statute.E) A) and B)
F) None of the above

Question 20

In the area of taxation, the trade-off between equity and efficiency

Accepted Answer

A)  never occurs since efficient taxes are often the most progressive.
B)  is relevant as efficient taxes are often regressive.
C)  is irrelevant.
D)  is relevant because efficient taxes are often progressive.E) All of the above
F) None of the above

Exam 17: Taxation and Resource Allocation

If a tax is progressive, the average tax rate

Correct Answer
verified

An efficient tax is one that raises the desired tax revenue but creates the least possible

Correct Answer
verified

Explain the concept of efficiency as it relates to taxation.

Correct Answer
verified
A tax is said to be efficient if it has ...
View Answer

The concept of vertical equity is that

Correct Answer
verified

Briefly and concisely define the following terms: a.fiscal federalism b.horizontal equity c.vertical equity d.benefits principle of taxation

Correct Answer
verified
a.Fiscal federalism is a system of inter...
View Answer

Correct Answer
verified

What is the flypaper theory of tax incidence? This theory is typically wrong.Why?

Correct Answer
verified
This is an axiom which maintains that th...
View Answer

Michigan recently did away with property taxes.Alternative funding for schools could come from

Correct Answer
verified

In the area of taxation, the trade-off between equity and efficiency

Correct Answer
verified

If a tax is regressive, the average tax rate

Correct Answer
verified

A progressive tax is one in which the fraction of income paid in taxes rises as a person's income increases.

Correct Answer
verified

Economists generally think that the ____ tax is among the best ways to raise revenue.

Correct Answer
verified

Which of the following taxes is most likely to be shifted?

Correct Answer
verified

A comprehensive income tax with few loopholes is efficient because labor

Correct Answer
verified

An excise tax on gasoline is regressive if

Correct Answer
verified

Employers can shift payroll taxes by substituting capital for labor.

Correct Answer
verified

The system of grants from one level of government to another is an example of fiscal federalism.

Correct Answer
verified

The United States Social Security system

Correct Answer
verified

Figure 18-2 -Figure 18-2 shows the widget market before and after an excise tax is imposed.The tax per widget equals ____.

Correct Answer
verified

Homeowners

Correct Answer
verified

Exam 17: Taxation and Resource Allocation

If a tax is progressive, the average tax rate

Correct AnswerverifiedShow Answer

An efficient tax is one that raises the desired tax revenue but creates the least possible

Correct AnswerverifiedShow Answer

Explain the concept of efficiency as it relates to taxation.

Correct AnswerverifiedA tax is said to be efficient if it has ...View AnswerShow Answer

The concept of vertical equity is that

Correct AnswerverifiedShow Answer

Briefly and concisely define the following terms: a.fiscal federalism b.horizontal equity c.vertical equity d.benefits principle of taxation

Correct Answerverifieda.Fiscal federalism is a system of inter...View AnswerShow Answer

Correct AnswerverifiedShow Answer

What is the flypaper theory of tax incidence? This theory is typically wrong.Why?

Correct AnswerverifiedThis is an axiom which maintains that th...View AnswerShow Answer

Michigan recently did away with property taxes.Alternative funding for schools could come from

Correct AnswerverifiedShow Answer

In the area of taxation, the trade-off between equity and efficiency

Correct AnswerverifiedShow Answer

If a tax is regressive, the average tax rate

Correct AnswerverifiedShow Answer

A progressive tax is one in which the fraction of income paid in taxes rises as a person's income increases.

Correct AnswerverifiedShow Answer

Economists generally think that the ____ tax is among the best ways to raise revenue.

Correct AnswerverifiedShow Answer

Which of the following taxes is most likely to be shifted?

Correct AnswerverifiedShow Answer

A comprehensive income tax with few loopholes is efficient because labor

Correct AnswerverifiedShow Answer

An excise tax on gasoline is regressive if

Correct AnswerverifiedShow Answer

Employers can shift payroll taxes by substituting capital for labor.

Correct AnswerverifiedShow Answer

The system of grants from one level of government to another is an example of fiscal federalism.

Correct AnswerverifiedShow Answer

The United States Social Security system

Correct AnswerverifiedShow Answer

Figure 18-2 -Figure 18-2 shows the widget market before and after an excise tax is imposed.The tax per widget equals ____.

Correct AnswerverifiedShow Answer

Homeowners

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A tax is said to be efficient if it has ...
View Answer

Correct Answer
verified

Correct Answer
verified
a.Fiscal federalism is a system of inter...
View Answer

Correct Answer
verified

Correct Answer
verified
This is an axiom which maintains that th...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct 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
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