Question 1

An example of a tax specifically designed to reduce consumption of a good is a tax on:

Accepted Answer

A)   automobiles.
B)   dairy products.
C)   gasoline.
D)   fast food.E) A) and C)
F) None of the above

Question 2

The Social Security system pays:

Accepted Answer

A)   current retirees from funds paid by current employees.
B)   retirees the money accumulated from the payroll tax collected throughout their working lives.
C)   current retirees from current general government revenues.
D)   current retirees from general government revenue surpluses they contributed to through taxes.E) A) and D)
F) B) and C)

Question 3

The administrative burden of a tax is:

Accepted Answer

A)   the difference between the revenues generated from the tax and the cost of the government program it is supposed to fund.
B)   what portion of the revenues come from the government.
C)   what portion of the revenues come from the producers versus the consumers.
D)   the logistical costs associated with implementing a tax.E) A) and B)
F) A) and C)

Question 4

Deficits and surpluses are commonly calculated as:

Accepted Answer

A)   debt per taxpayer.
B)   average debt per state.
C)   a percentage of national GDP.
D)   absolute values.E) A) and B)
F) All of the above

Question 5

If the price effect outweighs the quantity effect,then a tax:

Accepted Answer

A)   increase will raise revenue.
B)   decrease will raise revenue.
C)   increase will lower revenue.
D)   increase will not change revenue.E) A) and B)
F) All of the above

Question 6

In order to minimize deadweight loss generated by taxation,a tax should be placed on goods that are:

Accepted Answer

A)   price elastic.
B)   price inelastic.
C)   expensive.
D)   popular.E) None of the above
F) All of the above

Question 7

One cost associated with taxes is the: A redistribution of surplus.

Accepted Answer

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

Question 8

Discretionary spending involves public expenditures that:

Accepted Answer

A)   have to be approved each year.
B)   are planned in the federal budget and do not need annual approval.
C)   are mandated and regulated by permanent laws.
D)   "entitle" people to benefits by virtue of age, income, or some other factor.E) None of the above
F) A) and D)

Question 9

For a person earning $75,000,the marginal tax amount from 10,001 to $15,000 is:

Accepted Answer

A)   $500
B)   $750
C)   $1,750
D)   $2,000E) A) and B)
F) C) and D)

Question 10

A new toll of $0.50 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)   $5,000E) B) and D)
F) C) and D)

Question 11

1 to D2.The amount of tax revenue being generated by the tax imposed in the graph shown is: A)  area P2CAP4. B)  area P1DBP3. C)  area ABC. D)  area ABCD." class="answers-bank-image d-inline" rel="preload" > This graph depicts a tax being imposed,causing demand to shift from D1 to D2.The amount of tax revenue being generated by the tax imposed in the graph shown is:

Accepted Answer

A)   area P2CAP4.
B)   area P1DBP3.
C)   area ABC.
D)   area ABCD.E) All of the above
F) C) and D)

Question 12

The market for cigarettes likely has a:

Accepted Answer

A)   highly elastic demand.
B)   slightly elastic demand.
C)   highly inelastic demand.
D)   slightly inelastic demand.E) A) and D)
F) A) and C)

Question 13

A tax on individuals' earnings is called the:

Accepted Answer

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

Question 14

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 $0.75 trillion.E) B) and D)
F) B) and C)

Question 15

For a person earning $75,000,the marginal tax rate for the amount from 10,001 to $15,000 is:

Accepted Answer

A)   10%
B)   15%
C)   25%
D)   27.5%E) None of the above
F) C) and D)

Question 16

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

Accepted Answer

A)   raise more revenue.
B)   cause more inefficiency.
C)   cause a very big reaction in terms of decreased quantity demanded.
D)   produce very similar results in terms of revenue and inefficiency because the rate is the same.E) C) and D)
F) B) and C)

Question 17

A tax on the income earned by buying investments and selling them at a higher price is called the:

Accepted Answer

A)   sales tax.
B)   corporate income tax.
C)   capital gains tax.
D)   excise tax.E) A) and C)
F) C) and D)

Question 18

The concept of incidence is used to:

Accepted Answer

A)   indicate which tax bears the bigger burden.
B)   describe unexpected tax revenue generated.
C)   describe who bears the burden of a tax.
D)   describe how often people are taxed.E) B) and C)
F) A) and D)

Question 19

Which of the following is not an example of a commonly tax-funded program?

Accepted Answer

A)   Public education.
B)   Highways.
C)   Housing to those in need.
D)   Oil and gas production.E) C) and D)
F) B) and C)

Question 20

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 B)
F) B) and C)

Exam 20: Taxation and the Public Budget

A tax on individuals' earnings is called the:

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If the price effect outweighs the quantity effect,then a tax:

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Deficits and surpluses are commonly calculated as:

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The market for cigarettes likely has a:

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A tax on the income earned by buying investments and selling them at a higher price is called the:

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An example of a tax specifically designed to reduce consumption of a good is a tax on:

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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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The concept of incidence is used to:

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One cost associated with taxes is the: A redistribution of surplus.

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A new toll of $0.50 per car is in place on a bridge,and 1,000 cars have used the bridge.Total tax revenues would be:

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This graph depicts a tax being imposed,causing demand to shift from D1 to D2.The amount of tax revenue being generated by the tax imposed in the graph shown is:

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The Social Security system pays:

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For a person earning $75,000,the marginal tax amount from 10,001 to $15,000 is:

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For a person earning $75,000,the marginal tax rate for the amount from 10,001 to $15,000 is:

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The administrative burden of a tax is:

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Discretionary spending involves public expenditures that:

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Which of the following is not an example of a commonly tax-funded program?

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In order to minimize deadweight loss generated by taxation,a tax should be placed on goods that are:

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

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An income tax is a tax:

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This graph depicts a tax being imposed,causing demand to shift from D₁ to D₂.The amount of tax revenue being generated by the tax imposed in the graph shown is:

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