Question 1

In a progressive income tax system,

Accepted Answer

A)  the marginal tax rate exceeds the average tax rate.
B)  the average tax rate exceeds the marginal tax rate.
C)  high income earners pay a lower percentage of their income in taxes than do low income earners.
D)  the tax rate depends solely on how long an individual has been in the labor force.

Question 2

-Using the above figure,which of the lines in the above diagram represents a progressive tax?

Accepted Answer

A)  A
B)  B
C)  C
D)  none of them

Question 3

Suppose the income tax rate schedule is 0 percent on the first $10,000; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on any income over $70,000.Family A earns $32,000 a year and Family B earns $70,000 a year.Both families each receive a ten percent raise.What is the marginal tax rate of each and what is the extra tax paid by each after the raise?

Accepted Answer

Family A's new income is $35,200 which f...

Question 4

An example of ad valorem taxation is

Accepted Answer

A)  a luxury tax.
B)  the corporate profit tax.
C)  the personal income tax.
D)  the Social Security tax.

Question 5

Which of the following statements about taxation is TRUE?

Accepted Answer

A)  Increasing taxes will always increase tax revenues.
B)  Static tax analysis recognizes that an increase in taxation could lead to a decrease in tax revenues.
C)  Dynamic tax analysis assumes that an increase in taxation will leave the tax base unchanged.
D)  There is a tax rate at which tax revenues are maximized.

Question 6

Over the long run,the fundamental funding sources for the government are

Accepted Answer

A)  user charges,taxes,and borrowing.
B)  taxes,transfer payments,and borrowing.
C)  user charges and taxes.
D)  taxes and borrowing.

Question 7

In order for the government to collect taxes,the government must first establish a(n)

Accepted Answer

A)  ad valorem taxation.
B)  tax base.
C)  philosophy of taxation.
D)  justice system.

Question 8

A local government currently has a tax base of $4 billion and a tax rate of 5 percent.If the tax rate is increased to 6 percent,the tax base will decrease to $3.5 billion.If the goal is to maximize tax revenues the tax rate should be

Accepted Answer

A)  lowered below 5 percent.
B)  kept at 5 percent.
C)  raised to 6 percent.
D)  abolished.

Question 9

How do taxation and user charges compare as government revenue sources?

Accepted Answer

A)  Each generates about the same amount of government revenue.
B)  Revenues from taxation are much greater than revenues from user charges.
C)  User charges generate much more revenue than do taxes.
D)  We don't know because the government does not publish revenue figures broken down.

Question 10

Explain why it is that how much consumers pay for an excise tax depends on how responsive they are to a given change in market price.

Accepted Answer

If consumers are more responsive to a gi...

Question 11

Under a progressive income tax system,the marginal income tax rate paid by taxpayers

Accepted Answer

A)  declines as their incomes increase.
B)  rises as their incomes increase.
C)  is unchanged as their incomes increase.
D)  is unrelated to their incomes.

Question 12

Suppose that in the economy of Springfield,USA,Homer,who has an income of $50,000,pays $10,000 in taxes.Edna,who has an income of $35,000,pays $9,000 in taxes.Based on this information,we could say that Springfield's tax system is

Accepted Answer

A)  proportional.
B)  progressive.
C)  regressive.
D)  flat.

Question 13

Which of the following statements about excise taxes is TRUE?

Accepted Answer

A)  The producer will increase the price of the good by the amount of the excise tax.
B)  The equilibrium price will increase and the equilibrium quantity will remain unchanged.
C)  Both the consumer and producer pay part of the excise tax.
D)  Consumers will refuse to pay excise taxes forcing the producers to pay it.

Question 14

The sum of public spending on goods and services and transfer payments during a given period cannot exceed tax revenues plus borrowed funds.This is the statement for

Accepted Answer

A)  ad valorem taxation.
B)  an excise tax.
C)  a sales tax.
D)  the government budget constraint.

Question 15

Jamal earns $160,000 per year and Josephina earns $80,000 per year.They both pay the same price to buy the identical automobile and each pays $1,600 in sales tax.In relation to their relative incomes,this is an example of a

Accepted Answer

A)  regressive tax.
B)  progressive tax.
C)  proportional tax.
D)  marginal tax.

Question 16

Corporate profits are

Accepted Answer

A)  taxed at too low a rate.
B)  taxed only when a stockholder sells his or her shares of stock.
C)  taxed twice-once by the corporate tax system,and again by personal tax system when they are paid to stockholders as dividends.
D)  taxed three times-once by the corporate tax system,again by the personal tax system,and again as capital gains.

Question 17

Ad valorem taxes

Accepted Answer

A)  are not used in the United States.
B)  are assessed as a percentage of a good's price.
C)  are based on income levels.
D)  are applied only to imports.

Question 18

Ad valorem taxation

Accepted Answer

A)  refers to the personal income tax.
B)  is used to tax goods but not services.
C)  is assessed by charging a tax rate as a fraction of the market price of a good.
D)  is a tax that is applied only to cigarettes and alcohol.

Question 19

If we wanted to analyze the effects of a $2 unit tax graphically,we would shift the

Accepted Answer

A)  supply curve upward by $2.
B)  supply curve downward by $2.
C)  demand curve upward by $2.
D)  demand curve downward by $2.

Question 20

Which of the following are considered ad valorem taxes?

Accepted Answer

A)  taxes assessed by charging a rate equal to a percentage of an item's price
B)  taxes assessed by charging a flat amount per unit purchased
C)  taxes based on the amount of debt that the government must repay
D)  taxes based on the amount of spending the government will undertake

Exam 5: Funding the Public Sector

Which of the following are considered ad valorem taxes?

Correct Answer
verified

Explain why it is that how much consumers pay for an excise tax depends on how responsive they are to a given change in market price.

Correct Answer
verified
If consumers are more responsive to a gi...
View Answer

In a progressive income tax system,

Correct Answer
verified

Under a progressive income tax system,the marginal income tax rate paid by taxpayers

Correct Answer
verified

A local government currently has a tax base of $4 billion and a tax rate of 5 percent.If the tax rate is increased to 6 percent,the tax base will decrease to $3.5 billion.If the goal is to maximize tax revenues the tax rate should be

Correct Answer
verified

Over the long run,the fundamental funding sources for the government are

Correct Answer
verified

If we wanted to analyze the effects of a $2 unit tax graphically,we would shift the

Correct Answer
verified

Ad valorem taxes

Correct Answer
verified

-Using the above figure,which of the lines in the above diagram represents a progressive tax?

Correct Answer
verified

In order for the government to collect taxes,the government must first establish a(n)

Correct Answer
verified

Ad valorem taxation

Correct Answer
verified

Corporate profits are

Correct Answer
verified

An example of ad valorem taxation is

Correct Answer
verified

The sum of public spending on goods and services and transfer payments during a given period cannot exceed tax revenues plus borrowed funds.This is the statement for

Correct Answer
verified

Which of the following statements about excise taxes is TRUE?

Correct Answer
verified

Jamal earns $160,000 per year and Josephina earns $80,000 per year.They both pay the same price to buy the identical automobile and each pays $1,600 in sales tax.In relation to their relative incomes,this is an example of a

Correct Answer
verified

Suppose that in the economy of Springfield,USA,Homer,who has an income of $50,000,pays $10,000 in taxes.Edna,who has an income of $35,000,pays $9,000 in taxes.Based on this information,we could say that Springfield's tax system is

Correct Answer
verified

Correct Answer
verified
Family A's new income is $35,200 which f...
View Answer

Which of the following statements about taxation is TRUE?

Correct Answer
verified

How do taxation and user charges compare as government revenue sources?

Correct Answer
verified

Exam 5: Funding the Public Sector

Which of the following are considered ad valorem taxes?

Correct AnswerverifiedShow Answer

Explain why it is that how much consumers pay for an excise tax depends on how responsive they are to a given change in market price.

Correct AnswerverifiedIf consumers are more responsive to a gi...View AnswerShow Answer

In a progressive income tax system,

Correct AnswerverifiedShow Answer

Under a progressive income tax system,the marginal income tax rate paid by taxpayers

Correct AnswerverifiedShow Answer

A local government currently has a tax base of $4 billion and a tax rate of 5 percent.If the tax rate is increased to 6 percent,the tax base will decrease to $3.5 billion.If the goal is to maximize tax revenues the tax rate should be

Correct AnswerverifiedShow Answer

Over the long run,the fundamental funding sources for the government are

Correct AnswerverifiedShow Answer

If we wanted to analyze the effects of a $2 unit tax graphically,we would shift the

Correct AnswerverifiedShow Answer

Ad valorem taxes

Correct AnswerverifiedShow Answer

-Using the above figure,which of the lines in the above diagram represents a progressive tax?

Correct AnswerverifiedShow Answer

In order for the government to collect taxes,the government must first establish a(n)

Correct AnswerverifiedShow Answer

Ad valorem taxation

Correct AnswerverifiedShow Answer

Corporate profits are

Correct AnswerverifiedShow Answer

An example of ad valorem taxation is

Correct AnswerverifiedShow Answer

The sum of public spending on goods and services and transfer payments during a given period cannot exceed tax revenues plus borrowed funds.This is the statement for

Correct AnswerverifiedShow Answer

Which of the following statements about excise taxes is TRUE?

Correct AnswerverifiedShow Answer

Jamal earns $160,000 per year and Josephina earns $80,000 per year.They both pay the same price to buy the identical automobile and each pays $1,600 in sales tax.In relation to their relative incomes,this is an example of a

Correct AnswerverifiedShow Answer

Suppose that in the economy of Springfield,USA,Homer,who has an income of $50,000,pays $10,000 in taxes.Edna,who has an income of $35,000,pays $9,000 in taxes.Based on this information,we could say that Springfield's tax system is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedFamily A's new income is $35,200 which f...View AnswerShow Answer

Which of the following statements about taxation is TRUE?

Correct AnswerverifiedShow Answer

How do taxation and user charges compare as government revenue sources?

Correct AnswerverifiedShow Answer

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If consumers are more responsive to a gi...
View Answer

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Family A's new income is $35,200 which f...
View Answer

Correct Answer
verified

Correct Answer
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