Question 1

The incidence of a tax pertains to

Accepted Answer

A)   the degree to which it alters the distribution of income.
B)   how easy it is to evade the tax.
C)   who actually bears the burden of a tax.
D)   the progressiveness or regressiveness of tax rates.E) A) and B)
F) All of the above

Question 2

Although state and local taxes are highly progressive, federal taxation is predominantly regressive.

Accepted Answer

A) True 
 B)False

Question 3

Transfer payments are about percent of U.S. domestic output (as of 2015) .

Accepted Answer

A)   35
B)   8
C)   15
D)   22E) A) and B)
F) A) and C)

Question 4

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of demand for X is unitary (coefficient = 1) . If the incidence of the tax is such that the producers of X pay $1.75 of the tax and the consumers pay $.25, we can conclude that the

Accepted Answer

A)   supply of X is highly inelastic.
B)   supply of X is highly elastic.
C)   demand for X is highly inelastic.
D)   demand for X is highly elastic.E) A) and D)
F) None of the above

Question 5

A major distinction between government purchases and government transfer payments is that

Accepted Answer

A)   government purchases divert resources from private uses to public uses, while transfer payments do not.
B)   transfer payments divert resources from private uses to public uses, while government purchases do not.
C)   government purchases have to be approved by Congress, while transfer payments do not.
D)   government purchases of goods and services have increased more rapidly during the past 20 years than have transfer payments.E) All of the above
F) A) and B)

Question 6

Which of the following is the most important source of tax revenue for state governments?

Accepted Answer

A)   personal income tax
B)   property taxes
C)   sales and excise taxes
D)   corporate income taxE) A) and C)
F) A) and D)

Question 7

Currently (2016)  the marginal tax rates of the federal personal income tax

Accepted Answer

A)   are less than corresponding average tax rates.
B)   rise from 5 to 35 percent.
C)   fall from 20 to 10 percent.
D)   rise from 10 to 39.6 percent.E) C) and D)
F) All of the above

Question 8

In 2014, the so-called Tax Freedom Day in the U.S. occurred in

Accepted Answer

A)   February.
B)   April.
C)   August.
D)   June.E) C) and D)
F) A) and D)

Question 9

In 2011, the 20 percent of families with the lowest incomes paid an effective average federal tax rate (on all federal taxes)  of about , whereas the 20 percent of families with the highest incomes paid an effective average tax rate of about .

Accepted Answer

A)   5.5 percent; 50 percent
B)   10.3 percent; 30.9 percent
C)   8.4 percent; 27.5 percent
D)   1.9 percent; 23.4 percentE) None of the above
F) B) and D)

Question 10

If an income tax is progressive, the average tax rate will increase as incomes increase.

Accepted Answer

A) True 
 B)False

Question 11

Assume that you pay $10,000 of tax on a taxable income of $50,000. If your taxable income were $150,000, your tax payment would be $25,000. This suggests the tax is

Accepted Answer

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

Question 12

The greater the elasticity of supply of and demand for a good, the

Accepted Answer

A)   smaller will be the efficiency loss of an excise tax on the good.
B)   more likely the good will be a public good rather than a private good.
C)   larger will be the efficiency loss of an excise tax on the good.
D)   larger will be the proportion of an excise tax on the good that will be shifted forward to consumers.E) All of the above
F) A) and B)

Question 13

According to the Organization for Economic Cooperation and Development (OECD) ,

Accepted Answer

A)   the United States has the most progressive tax system among OECD nations.
B)   the United States has the least progressive tax system among OECD nations.
C)   the U.S. tax system has the same degree of progressivity as those of nations such as Canada, Japan, and France.
D)   the U.S. tax system has the same degree of progressivity as those of many developing nations.E) B) and D)
F) C) and D)

Question 14

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 D)
F) B) and C)

Question 15

The average tax rate is

Accepted Answer

A)   equal to the marginal tax rate if the tax is progressive.
B)   the total tax rate minus the marginal tax rate.
C)   the ratio of total taxes paid to total taxable income.
D)   the tax rate that applies to incremental dollars of income.E) B) and D)
F) A) and B)

Question 16

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 15 percent of domestic output.
D)   is larger today, as a percentage of total output, than in 1960.E) C) and D)
F) B) and D)

Question 17

"Transfer payments" may be thought of as

Accepted Answer

A)   wages and salaries.
B)   purchases of services.
C)   taxes in reverse.
D)   expenditures on products.E) A) and B)
F) All of the above

Question 18

A nationâ€™s "tax burden" is measured by the

Accepted Answer

A)   total amount of tax dollars paid by the citizens.
B)   average tax rate on taxable income in the nation.
C)   governmentâ€™s tax revenues as a percentage of GDP.
D)   average of personal-income and corporate-income tax rates.E) B) and D)
F) A) and B)

Question 19

The supply of meat is more elastic in the long run than in the short run. Ceteris paribus, as time goes by, the burden of a tax on cattle will increasingly be shouldered by the

Accepted Answer

A)   grocer.
B)   government.
C)   rancher.
D)   consumer.E) B) and D)
F) None of the above

Question 20

Education is the largest expenditure item for state governments as well as local governments in the U.S.

Accepted Answer

A) True 
 B)False

Exam 20: Public Finance: Expenditures and Taxes

Although state and local taxes are highly progressive, federal taxation is predominantly regressive.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The greater the elasticity of supply of and demand for a good, the

Correct AnswerverifiedShow Answer

In 2011, the 20 percent of families with the lowest incomes paid an effective average federal tax rate (on all federal taxes) of about , whereas the 20 percent of families with the highest incomes paid an effective average tax rate of about .

Correct AnswerverifiedShow Answer

Which of the following is the most important source of tax revenue for state governments?

Correct AnswerverifiedShow Answer

The supply of meat is more elastic in the long run than in the short run. Ceteris paribus, as time goes by, the burden of a tax on cattle will increasingly be shouldered by the

Correct AnswerverifiedShow Answer

Assume that you pay $10,000 of tax on a taxable income of $50,000. If your taxable income were $150,000, your tax payment would be $25,000. This suggests the tax is

Correct AnswerverifiedShow Answer

In 2014, the so-called Tax Freedom Day in the U.S. occurred in

Correct AnswerverifiedShow Answer

Transfer payments are about percent of U.S. domestic output (as of 2015) .

Correct AnswerverifiedShow Answer

Currently (2016) the marginal tax rates of the federal personal income tax

Correct AnswerverifiedShow Answer

A major distinction between government purchases and government transfer payments is that

Correct AnswerverifiedShow Answer

If an income tax is progressive, the average tax rate will increase as incomes increase.

Correct AnswerverifiedShow Answer

The average tax rate is

Correct AnswerverifiedShow Answer

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of demand for X is unitary (coefficient = 1) . If the incidence of the tax is such that the producers of X pay $1.75 of the tax and the consumers pay $.25, we can conclude that the

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

"Transfer payments" may be thought of as

Correct AnswerverifiedShow Answer

The incidence of a tax pertains to

Correct AnswerverifiedShow Answer

Education is the largest expenditure item for state governments as well as local governments in the U.S.

Correct AnswerverifiedShow Answer

A nationâ€™s "tax burden" is measured by the

Correct AnswerverifiedShow Answer

According to the Organization for Economic Cooperation and Development (OECD) ,

Correct AnswerverifiedShow Answer

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