Question 1

Other things being equal, the burden of a sales tax on a product will be borne entirely by the producer if

Accepted Answer

A)  demand is perfectly elastic.
B)  supply is perfectly elastic.
C)  supply and demand have the same price elasticity.
D)  demand is perfectly inelastic.E) B) and D)
F) A) and B)

Question 2

A tax that takes a larger proportion of income from low-income groups than from high-income groups is a

Accepted Answer

A)  stabilizing tax.
B)  regressive tax.
C)  progressive tax.
D)  proportional tax.E) C) and D)
F) B) and C)

Question 3

Currently (2016)  the marginal tax rates of the federal personal income tax

Accepted Answer

A)  are less than corresponding average tax rates.
B)  rise from 5 to 35 percent.
C)  fall from 20 to 10 percent.
D)  rise from 10 to 39.6 percent.E) A) and B)
F) None of the above

Question 4

The burden of a specific sales tax falls entirely on the consumer when the

Accepted Answer

A)  elasticity of supply is zero.
B)  demand curve is perfectly elastic.
C)  price elasticity of demand is greater than the elasticity of supply.
D)  price elasticity of demand is zero.E) A) and C)
F) C) and D)

Question 5

If everyone pays a fixed dollar amount of tax, then the tax is a

Accepted Answer

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

Question 6

Approximately what percentage of local government expenditures goes to finance education?

Accepted Answer

A)  36
B)  46
C)  53
D)  69E) None of the above
F) All of the above

Question 7

In economics, the "public sector" refers to the

Accepted Answer

A)  general public.
B)  consuming public as well as businesses.
C)  federal, state, and local government.
D)  publicly owned corporations.E) All of the above
F) A) and B)

Question 8

A person whose income has increased from $10,000 to $20,000 finds that her federal marginal tax rate has increased from 18 percent to 22 percent.This is an example of a

Accepted Answer

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

Question 9

In the U.S., the progressive income-tax system substantially redistributes income.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  a state excise tax on the sellers of football tickets
B)  a personal income tax
C)  a general sales tax on retailers who sell foodstuffs and clothing
D)  a federal excise tax on the producers of whiskeyE) B) and C)
F) A) and B)

Question 11

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of supply of X is unitary (coefficient = 1) .If the incidence of the tax is such that the producers of X pay $1.90 of the tax and the consumers pay $.10, 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) All of the above
F) C) and D)

Question 12

The benefits-received principle of taxation is

Accepted Answer

A)  the basis for the gasoline tax.
B)  easy to apply because benefits received are conveniently measurable.
C)  applied in income-redistribution programs.
D)  the principle behind the income tax system.E) C) and D)
F) A) and D)

Question 13

Just like businesses, the public sector uses resources in order to produce goods and services.

Accepted Answer

A) True 
 B)False

Question 14

The largest portion of federal employees work in the national defense sector.

Accepted Answer

A) True 
 B)False

Question 15

With respect to state finance, for most states

Accepted Answer

A)  estate taxes are the major source of revenue and most expenditures are for health services.
B)  the corporate income tax is the major source of revenue and natural resource development is the major type of expenditure.
C)  property taxes are the basic source of revenue and education is the major type of expenditure.
D)  sales and excise taxes are the major source of revenue and education is the major type of expenditure.E) A) and B)
F) None of the above

Question 16

The U.S.federal expenditures for "pensions and income security" are dominated by

Accepted Answer

A)  housing subsidies.
B)  unemployment benefits.
C)  food stamps.
D)  Social Security payments.E) A) and B)
F) B) and D)

Question 17

With a tax of $2,000 on $30,000 of income and $2,000 on $70,000 of income, we can describe the structure of this tax as

Accepted Answer

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

Question 18

Which of the following is the largest expenditure item of local governments?

Accepted Answer

A)  highways
B)  welfare
C)  education
D)  public safetyE) A) and D)
F) B) and D)

Question 19

The federal payroll (Social Security)  tax

Accepted Answer

A)  increases the progressivity of the federal tax system.
B)  offsets some of the progressivity of the federal tax system.
C)  offsets some of the regressivity of the federal tax system.
D)  decreases the proportionality of the federal tax system.E) None of the above
F) B) and D)

Question 20

The maximum federal marginal tax rate on taxable personal income is, as of 2016,

Accepted Answer

A)  50 percent.
B)  39.6 percent.
C)  35 percent.
D)  28 percent.E) A) and D)
F) A) and C)

Exam 20: Public Finance: Expenditures and Taxes

A tax that takes a larger proportion of income from low-income groups than from high-income groups is a

Correct AnswerverifiedShow Answer

With a tax of $2,000 on $30,000 of income and $2,000 on $70,000 of income, we can describe the structure of this tax as

Correct AnswerverifiedShow Answer

Just like businesses, the public sector uses resources in order to produce goods and services.

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The U.S.federal expenditures for "pensions and income security" are dominated by

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The burden of a specific sales tax falls entirely on the consumer when the

Correct AnswerverifiedShow Answer

Currently (2016) the marginal tax rates of the federal personal income tax

Correct AnswerverifiedShow Answer

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

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Other things being equal, the burden of a sales tax on a product will be borne entirely by the producer if

Correct AnswerverifiedShow Answer

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of supply of X is unitary (coefficient = 1) .If the incidence of the tax is such that the producers of X pay $1.90 of the tax and the consumers pay $.10, we can conclude that the

Correct AnswerverifiedShow Answer

If everyone pays a fixed dollar amount of tax, then the tax is a

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In economics, the "public sector" refers to the

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The maximum federal marginal tax rate on taxable personal income is, as of 2016,

Correct AnswerverifiedShow Answer

In the U.S., the progressive income-tax system substantially redistributes income.

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Which of the following is the largest expenditure item of local governments?

Correct AnswerverifiedShow Answer

With respect to state finance, for most states

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Approximately what percentage of local government expenditures goes to finance education?

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The largest portion of federal employees work in the national defense sector.

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The federal payroll (Social Security) tax

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A person whose income has increased from $10,000 to $20,000 finds that her federal marginal tax rate has increased from 18 percent to 22 percent.This is an example of a

Correct AnswerverifiedShow Answer

The benefits-received principle of taxation is

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