Question 1

The graph illustrates the market for a product on which an excise tax has been imposed by government. What is the area that represents the total amount of tax revenue going to the government?

Accepted Answer

A)  WXTV
B)  WXZU
C)  VTZU
D)  WXYZUE) A) and B)
F) A) and D)

Question 2

In 2018, corporate income taxes contributed about what percentage of U.S. federal tax revenues?

Accepted Answer

A)  6 percent
B)  10 percent
C)  25 percent
D)  50 percentE) A) and B)
F) A) and C)

Question 3

Suppose that government imposes a specific excise tax on product X of $6 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 $1.25 of the tax and the consumers pay $4.75, we can conclude that the

Accepted Answer

A)  supply of X is inelastic.
B)  demand for X is unitary elastic.
C)  demand for X is elastic.
D)  demand for X is inelastic.E) B) and C)
F) A) and B)

Question 4

In the figure, S is the before-tax supply curve and Sₜ is the supply curve after an excise tax is imposed. The total tax collection from this excise tax will be area

Accepted Answer

A)  ABCE + ECF.
B)  ABCE.
C)  ECF.
D)  0 BCG.E) All of the above
F) A) and B)

Question 5

The total amount of U.S. tax revenue needed to finance the public sector

Accepted Answer

A)  has been a declining percentage of the domestic output in this century.
B)  equals about 40 percent of domestic output.
C)  equals about 14 percent of domestic output.
D)  is larger today, as a percentage of total output, than in 1960.E) A) and C)
F) A) and D)

Question 6

Which of the following is necessarily true if the government were to replace a progressive income tax system with a proportional one?

Accepted Answer

A)  Lower income groups would pay less tax.
B)  Higher income groups would pay less tax.
C)  Lower income groups would pay more tax.
D)  The distribution of after-tax income would become less equal.E) B) and C)
F) A) and D)

Question 7

As a proportion of domestic output, taxes in the United States

Accepted Answer

A)  are lower than in most other industrially advanced countries.
B)  are higher than in most other industrially advanced countries.
C)  are approximately the same as in most other industrially advanced countries.
D)  doubled in the 1990s.E) All of the above
F) A) and D)

Question 8

In 2018, personal income taxes contributed what percentage of total federal tax revenues in the U.S.?

Accepted Answer

A)  about 50 percent
B)  between 60 percent and 70 percent
C)  about 33 percent
D)  around 90 percentE) A) and D)
F) A) and C)

Question 9

If government levies a tax or fee on hunting licenses and uses the resulting revenue for wildlife stocking programs, this would be an example of

Accepted Answer

A)  a progressive tax.
B)  a regressive tax.
C)  the ability-to-pay principle of taxation.
D)  the benefits-received principle of taxation.E) A) and B)
F) A) and C)

Question 10

The federal income tax is consistent with the __________ principle of taxation, whereas an excise tax on sporting event tickets is consistent with the ___________ principle of taxation.

Accepted Answer

A)  benefits-received; ability-to-pay
B)  benefits-received; pay-as-you-go
C)  ability-to-pay; benefits-received
D)  ability-to-pay; pay-as-you-goE) A) and B)
F) A) and C)

Question 11

Approximately what percentage of state spending goes to finance education?

Accepted Answer

A)  36
B)  23
C)  13
D)  47E) B) and C)
F) A) and D)

Question 12

One distinction between government purchases and transfer payments is that

Accepted Answer

A)  purchase are exhaustive, whereas transfers are nonexhaustive.
B)  purchase are nonexhaustive, whereas transfers are exhaustive.
C)  purchases are part of total government spending, whereas transfers are not.
D)  purchases are not part of total government spending, whereas transfers are.E) B) and C)
F) All of the above

Question 13

If the demand for a product is perfectly elastic and supply is upsloping, a $1 excise tax per unit on suppliers will

Accepted Answer

A)  not raise price at all.
B)  raise price by less than $1.
C)  raise price by more than $1.
D)  raise price by $1.E) None of the above
F) C) and D)

Question 14

Which of the following is not an argument presented by defenders of state-run lotteries?

Accepted Answer

A)  Lotteries are preferable to taxes because they are voluntary rather than compulsory.
B)  Higher-income families tend to spend a larger portion of their incomes on lotteries than do low-income families.
C)  Lotteries compete with illegal gambling and are thus socially beneficial in curtailing organized crime.
D)  They are a relatively painless way to finance government services such as education, medical care, and welfare programs.E) A) and D)
F) A) and B)

Question 15

In general for an excise tax on a product, given supply, the more elastic is the demand for the product, the larger will be the portion of the tax shouldered by the buyers.

Accepted Answer

A) True 
 B)False

Question 16

Payroll taxes account for more than one-third of federal tax revenues.

Accepted Answer

A) True 
 B)False

Question 17

Explain the difference between marginal and average tax rates.

Accepted Answer

The marginal tax rate is the tax rate pa...

Question 18

Government lotteries are

Accepted Answer

A)  used by a large number of states to supplement their tax revenues.
B)  illegal in the United States but are a common source of revenue in other countries.
C)  used by local governments but not by state governments.
D)  a form of progressive taxation.E) C) and D)
F) A) and D)

Question 19

Taxable income is

Accepted Answer

A)  total income less deductions and exemptions.
B)  the same as gross income.
C)  the only income to which marginal tax rates apply.
D)  the sum of all wage and property income.E) A) and B)
F) B) and C)

Question 20

The efficiency loss of a tax is

Accepted Answer

A)   the net value of sacrificed output caused by the tax.	
B)   that portion of the tax paid by producers minus the portion paid by consumers.
C)   that portion of the tax paid by consumers minus the portion paid by producers.
D)   the total tax revenue minus the output loss caused by the tax.E) B) and C)
F) A) and B)

Exam 20: Public Finance: Expenditures and Taxes

Explain the difference between marginal and average tax rates.

Correct AnswerverifiedThe marginal tax rate is the tax rate pa...View AnswerShow Answer

As a proportion of domestic output, taxes in the United States

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In the figure, S is the before-tax supply curve and Sₜ is the supply curve after an excise tax is imposed. The total tax collection from this excise tax will be area

Correct AnswerverifiedShow Answer

Taxable income is

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Government lotteries are

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Approximately what percentage of state spending goes to finance education?

Correct AnswerverifiedShow Answer

If government levies a tax or fee on hunting licenses and uses the resulting revenue for wildlife stocking programs, this would be an example of

Correct AnswerverifiedShow Answer

Payroll taxes account for more than one-third of federal tax revenues.

Correct AnswerverifiedShow Answer

Which of the following is necessarily true if the government were to replace a progressive income tax system with a proportional one?

Correct AnswerverifiedShow Answer

Suppose that government imposes a specific excise tax on product X of $6 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 $1.25 of the tax and the consumers pay $4.75, we can conclude that the

Correct AnswerverifiedShow Answer

The total amount of U.S. tax revenue needed to finance the public sector

Correct AnswerverifiedShow Answer

Which of the following is not an argument presented by defenders of state-run lotteries?

Correct AnswerverifiedShow Answer

In 2018, corporate income taxes contributed about what percentage of U.S. federal tax revenues?

Correct AnswerverifiedShow Answer

In general for an excise tax on a product, given supply, the more elastic is the demand for the product, the larger will be the portion of the tax shouldered by the buyers.

Correct AnswerverifiedShow Answer

In 2018, personal income taxes contributed what percentage of total federal tax revenues in the U.S.?

Correct AnswerverifiedShow Answer

One distinction between government purchases and transfer payments is that

Correct AnswerverifiedShow Answer

If the demand for a product is perfectly elastic and supply is upsloping, a $1 excise tax per unit on suppliers will

Correct AnswerverifiedShow Answer

The graph illustrates the market for a product on which an excise tax has been imposed by government. What is the area that represents the total amount of tax revenue going to the government?

Correct AnswerverifiedShow Answer

The federal income tax is consistent with the __________ principle of taxation, whereas an excise tax on sporting event tickets is consistent with the ___________ principle of taxation.

Correct AnswerverifiedShow Answer

The efficiency loss of a tax is

Correct AnswerverifiedShow Answer

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The marginal tax rate is the tax rate pa...
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The federal income tax is consistent with the principle of taxation, whereas an excise tax on sporting event tickets is consistent with the _ principle of taxation.

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