Question 1

Since the end of World War II, corporate income taxes have accounted for

Accepted Answer

A)  an increasing share of federal revenue.
B)  a steady share of federal revenue.
C)  a declining share of federal revenue.
D)  a rising share of revenue until 1980, and then a falling share.E) A) and B)
F) A) and C)

Question 2

In 1984, the South Carolina State Supreme Court ruled that a 20 percent admission tax on X-rated movies was unconstitutional.When the affected cinemas sought a refund of collected taxes, they were denied on the grounds that the tax, although collected by the theater, was indeed paid by the theatergoers.The Supreme Court apparently believed

Accepted Answer

A)  the supply of X-rated movies was perfectly elastic.
B)  the demand for X-rated movies was perfectly inelastic.
C)  the legislation intended that the theatergoers pay the tax.
D)  the burden fell on the theatergoers-there are no excess burdens on the theater.E) B) and D)
F) A) and D)

Question 3

Sales taxes, property taxes, and value-added taxes are examples of indirect taxes.

Accepted Answer

A) True 
 B)False

Question 4

If the supply of a good is perfectly inelastic, then suppliers will bear the full burden of an excise tax

Accepted Answer

A)  no matter how elastic the demand for the good is.
B)  only if demand is perfectly elastic.
C)  only if demand is perfectly inelastic.
D)  only if the government forbids them to raise the price of the good.E) C) and D)
F) B) and D)

Question 5

Under a progressive tax, the fraction of income paid in taxes

Accepted Answer

A)  rises as income rises.
B)  is unchanged as income changes.
C)  falls as income rises.
D)  is proportional to the change in income.E) None of the above
F) A) and B)

Question 6

Many environmentalists have advocated a substantial increase in the gasoline tax to cut down the federal deficit and to reduce pollution due to auto emissions.Such a tax increase would be devastating to people who commute significant distances to work.In fact, it would provide an incentive to relocate closer to work or change jobs.Economists refer to such effects of taxes as the

Accepted Answer

A)  burden of a tax.
B)  regressive incidence of a tax.
C)  incidence of a tax.
D)  excess burden of a tax.E) A) and B)
F) C) and D)

Question 7

The courts in some states have declared the financing of public schools by local property taxes unconstitutional because

Accepted Answer

A)  housing should never be the basis for taxation of any kind.
B)  taxes on real estate generate too much tax revenue.
C)  disparity in property values means some communities have more in tax revenues to spend on education than do communities containing less valuable property.
D)  the funds for public education should come from federal revenues, not from local property taxes.E) A) and B)
F) A) and C)

Question 8

Federal tax loopholes in personal income tax provide benefits only to very high-income people.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following best reflects the ability-to-pay philosophy of taxation?

Accepted Answer

A)  an excise tax on coffee 
B)  an excise tax on gasoline 
C)  a progressive income tax 
D)  a tax on residential propertyE) A) and B)
F) C) and D)

Question 10

Define the following terms and explain their importance to the study of economics:
a.regressive tax
b.proportional tax
c.progressive tax
d.direct tax
e.indirect tax

Accepted Answer

a.A regressive tax is one in which the a...

Question 11

State and local governments typically spend most of their budgets on providing

Accepted Answer

A)  education.
B)  public goods.
C)  public welfare programs.
D)  police protection and administrative services.E) A) and D)
F) None of the above

Question 12

Taxes are either

Accepted Answer

A)  regressive, proportional, or degressive.
B)  regressive, proportional, or progressive.
C)  degressive, proportional, or progressive.
D)  regressive, progressive, or degressive.E) A) and D)
F) A) and C)

Question 13

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

Accepted Answer

A)  a federal excise tax on grapefruit 
B)  a sales tax on some foodstuffs 
C)  a personal income tax 
D)  a state tax on football ticketsE) A) and D)
F) B) and C)

Question 14

Officially, the payroll tax is referred to as

Accepted Answer

A)  the trust fund tax.
B)  Social Security tax.
C)  contributions for social insurance.
D)  investment in Social Security.E) All of the above
F) B) and C)

Question 15

Examples of indirect taxes are

Accepted Answer

A)  income taxes levied by some states.
B)  sales taxes and property taxes.
C)  poll taxes.
D)  corporate profits taxes.E) A) and B)
F) All of the above

Question 16

A proportional 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 17

Most loopholes in the income tax system

Accepted Answer

A)  are more likely to be exploited by the wealthy.
B)  make it more progressive.
C)  were created by the tax reforms instituted in 1986.
D)  do not affect the economic decisions of the people who benefit from them.E) All of the above
F) A) and C)

Question 18

Interest income on municipal bonds

Accepted Answer

A)  is subject to a portion of federal income tax.
B)  is taxable on amounts greater than $15,000 per year.
C)  is payable quarterly, at time of coupon redemption.
D)  is exempt from federal income tax.E) B) and C)
F) A) and C)

Question 19

In Country X, the government requires employers to collect 9 percent of every employee's compensation as payroll tax.This is an example of

Accepted Answer

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

Question 20

A tax that creates an excess burden may nevertheless improve efficiency if

Accepted Answer

A)  consumption of the good has been generating beneficial externalities.
B)  consumption of the good has been generating no externalities.
C)  consumption of the good has been generating detrimental externalities.
D)  the good has been supplied by a monopolist.E) C) and D)
F) B) and D)

Exam 17: Taxation and Resource Allocation

If the supply of a good is perfectly inelastic, then suppliers will bear the full burden of an excise tax

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
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Interest income on municipal bonds

Correct Answer
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Officially, the payroll tax is referred to as

Correct Answer
verified

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

Correct Answer
verified

Under a progressive tax, the fraction of income paid in taxes

Correct Answer
verified

Define the following terms and explain their importance to the study of economics: a.regressive tax b.proportional tax c.progressive tax d.direct tax e.indirect tax

Correct Answer
verified
a.A regressive tax is one in which the a...
View Answer

Sales taxes, property taxes, and value-added taxes are examples of indirect taxes.

Correct Answer
verified

Which of the following best reflects the ability-to-pay philosophy of taxation?

Correct Answer
verified

Most loopholes in the income tax system

Correct Answer
verified

Taxes are either

Correct Answer
verified

In Country X, the government requires employers to collect 9 percent of every employee's compensation as payroll tax.This is an example of

Correct Answer
verified

Since the end of World War II, corporate income taxes have accounted for

Correct Answer
verified

Examples of indirect taxes are

Correct Answer
verified

A tax that creates an excess burden may nevertheless improve efficiency if

Correct Answer
verified

Correct Answer
verified

Federal tax loopholes in personal income tax provide benefits only to very high-income people.

Correct Answer
verified

State and local governments typically spend most of their budgets on providing

Correct Answer
verified

The courts in some states have declared the financing of public schools by local property taxes unconstitutional because

Correct Answer
verified

Exam 17: Taxation and Resource Allocation

If the supply of a good is perfectly inelastic, then suppliers will bear the full burden of an excise tax

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Interest income on municipal bonds

Correct AnswerverifiedShow Answer

Officially, the payroll tax is referred to as

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Under a progressive tax, the fraction of income paid in taxes

Correct AnswerverifiedShow Answer

Define the following terms and explain their importance to the study of economics: a.regressive tax b.proportional tax c.progressive tax d.direct tax e.indirect tax

Correct Answerverifieda.A regressive tax is one in which the a...View AnswerShow Answer

Sales taxes, property taxes, and value-added taxes are examples of indirect taxes.

Correct AnswerverifiedShow Answer

Which of the following best reflects the ability-to-pay philosophy of taxation?

Correct AnswerverifiedShow Answer

Most loopholes in the income tax system

Correct AnswerverifiedShow Answer

Taxes are either

Correct AnswerverifiedShow Answer

In Country X, the government requires employers to collect 9 percent of every employee's compensation as payroll tax.This is an example of

Correct AnswerverifiedShow Answer

Since the end of World War II, corporate income taxes have accounted for

Correct AnswerverifiedShow Answer

Examples of indirect taxes are

Correct AnswerverifiedShow Answer

A tax that creates an excess burden may nevertheless improve efficiency if

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Federal tax loopholes in personal income tax provide benefits only to very high-income people.

Correct AnswerverifiedShow Answer

State and local governments typically spend most of their budgets on providing

Correct AnswerverifiedShow Answer

The courts in some states have declared the financing of public schools by local property taxes unconstitutional because

Correct AnswerverifiedShow Answer

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a.A regressive tax is one in which the a...
View Answer

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