Question 1

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

Accepted Answer

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

Question 2

A concept useful in evaluating the costs and benefits of alternative types of taxes is:

Accepted Answer

A)  efficiency.
B)  revenue.
C)  incidence.
D)  All of these are used to evaluate the overall effect of taxes.E) B) and D)
F) B) and C)

Question 3

One cost associated with taxes is:

Accepted Answer

A)  the administrative burden.
B)  the redistribution of surplus.
C)  the resulting underconsumption.
D)  the change in relative values.E) B) and C)
F) A) and B)

Question 4

One of the three classifications of taxes is:

Accepted Answer

A)  regressive.
B)  progressive.
C)  proportional.
D)  All of these are classifications for taxes.E) B) and C)
F) C) and D)

Question 5

If the federal government brings in $3 trillion in tax revenues and spends $4 trillion,the government has a budget:

Accepted Answer

A)  surplus of $1 trillion.
B)  deficit of $1 trillion.
C)  surplus of $7 trillion.
D)  deficit of $.75 trillion.E) A) and B)
F) A) and C)

Question 6

In general,the more equitable the incidence of a tax system is:

Accepted Answer

A)  the more complicated and less efficient is its design.
B)  the less complicated and more efficient is its design.
C)  the more complicated and more efficient is its design.
D)  the less complicated and less efficient is its design.E) C) and D)
F) A) and D)

Question 7

Taxing the market for alcohol the same rate as the market for juice will likely:

Accepted Answer

A)  raise more revenue.
B)  cause less inefficiency.
C)  not cause a very big reaction in terms of decreased quantity demanded.
D)  All of these statements are true.E) All of the above
F) A) and B)

Question 8

When a tax is imposed,the surplus that is lost to buyers and sellers but converted into tax revenue is:

Accepted Answer

A)  considered a cost of taxation.
B)  part of deadweight loss.
C)  the sole source of deadweight loss.
D)  not part of deadweight loss.E) A) and B)
F) A) and C)

Question 9

A new toll of $.50 per car is in place on a bridge,and 1,000 cars have used the bridge.Total tax revenues would be:

Accepted Answer

A)  $500.
B)  $2,000.
C)  $1,000.
D)  Impossible to answer without knowing what the quantity of cars using the bridge was before the toll was in place.E) None of the above
F) B) and C)

Question 10

One of the primary aims of taxation is:

Accepted Answer

A)  to increase government revenues.
B)  to reduce the equilibrium quantity.
C)  to alter the incentives of market participants.
D)  All of these are primary goals of taxation.E) A) and C)
F) B) and C)

Question 11

Higher income countries tend to collect _____________ as a percentage of their GDP than do low-income countries.

Accepted Answer

A)  greater tax revenues
B)  smaller tax revenues
C)  about the same in tax revenues
D)  There is really no correlation between a country's wealth and the tax revenues it generates.E) None of the above
F) B) and C)

Question 12

An income tax is a tax:

Accepted Answer

A)  charged on the earnings of individuals and corporations.
B)  on income earned by buying investments and selling them at a higher price.
C)  on the wages paid to an employee.
D)  charged on the value of a good or service being purchased.E) A) and D)
F) All of the above

Question 13

The payroll tax and the income tax differ in that:

Accepted Answer

A)  the employer pays the payroll tax,and the individual pays the income tax.
B)  the payroll tax is tied directly to specific programs while the personal income tax goes into a general government revenue.
C)  employers have to pay both payroll and corporate income taxes,and individuals only have to pay personal income tax.
D)  the employer pays the payroll tax,but the income tax burden is shared between employer and employee.E) B) and D)
F) None of the above

Question 14

In general,the most efficient taxes:

Accepted Answer

A)  are often not the most equitable.
B)  are often the most equitable.
C)  raise the most revenues.
D)  do not raise the most revenues.E) C) and D)
F) B) and D)

Question 15

A tax on the value of a good or service being purchased is called the:

Accepted Answer

A)  sales tax.
B)  payroll tax.
C)  personal income tax.
D)  excise tax.E) A) and B)
F) A) and C)

Question 16

The total amount of surplus lost due to taxation is:

Accepted Answer

A)  greater than the amount of revenue generated.
B)  less than the amount of revenue generated.
C)  transferred to the government in the form of tax revenues.
D)  None of these statements is true.E) B) and C)
F) None of the above

Question 17

The tax rate that maximizes the government's revenues:

Accepted Answer

A)  is not the level that is "best" for the economy.
B)  is the level that is "best" for the economy.
C)  is 30 percent.
D)  is 85 percent.E) C) and D)
F) A) and B)

Question 18

The statutory incidence of the tax means:

Accepted Answer

A)  who is legally obligated to pay the tax to the government.
B)  who actually loses surplus as a result of the tax.
C)  who bears the burden of any sort of tax.
D)  who gains surplus as a result of the government redistributing tax revenue.E) C) and D)
F) B) and D)

Question 19

A $.50 tax on lemons currently generates $200 in revenues per day.If the tax were increased to $2,the revenues generated would drop to $70.This tells you that in this range of tax rates:

Accepted Answer

A)  the quantity effect outweighs the price effect.
B)  the quantity effect outweighs the income effect.
C)  the price effect outweighs the quantity effect.
D)  the price effect outweighs the income effect.E) A) and B)
F) None of the above

Question 20

When tax rates fall,people tend to:

Accepted Answer

A)  hardly increase the amount they work.
B)  increase the amount they work a great deal.
C)  hardly decrease the amount they work.
D)  decrease the amount they work,although to what degree is still being researched.E) A) and C)
F) A) and B)

Exam 20: Taxation and the Public Budget

An income tax is a tax:

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One of the three classifications of taxes is:

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If the federal government brings in $3 trillion in tax revenues and spends $4 trillion,the government has a budget:

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In general,the most efficient taxes:

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The payroll tax and the income tax differ in that:

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The total amount of surplus lost due to taxation is:

Correct AnswerverifiedShow Answer

Higher income countries tend to collect _____________ as a percentage of their GDP than do low-income countries.

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One cost associated with taxes is:

Correct AnswerverifiedShow Answer

In general,the more equitable the incidence of a tax system is:

Correct AnswerverifiedShow Answer

A concept useful in evaluating the costs and benefits of alternative types of taxes is:

Correct AnswerverifiedShow Answer

When tax rates fall,people tend to:

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The tax rate that maximizes the government's revenues:

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

Correct AnswerverifiedShow Answer

One of the primary aims of taxation is:

Correct AnswerverifiedShow Answer

A new toll of $.50 per car is in place on a bridge,and 1,000 cars have used the bridge.Total tax revenues would be:

Correct AnswerverifiedShow Answer

The statutory incidence of the tax means:

Correct AnswerverifiedShow Answer

A tax on the value of a good or service being purchased is called the:

Correct AnswerverifiedShow Answer

A $.50 tax on lemons currently generates $200 in revenues per day.If the tax were increased to $2,the revenues generated would drop to $70.This tells you that in this range of tax rates:

Correct AnswerverifiedShow Answer

Taxing the market for alcohol the same rate as the market for juice will likely:

Correct AnswerverifiedShow Answer

When a tax is imposed,the surplus that is lost to buyers and sellers but converted into tax revenue is:

Correct AnswerverifiedShow Answer

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