Question 1

The side of the market that will bear a greater share of the tax burden is the side that:

Accepted Answer

A)  responds less to a change in prices.
B)  is more inelastic.
C)  changes quantity by a smaller percentage when the price changes by a given percentage.
D)  All of these statements are true.

Question 2

One cost associated with the imposition of taxes is:

Accepted Answer

A)  deadweight loss.
B)  scarcity.
C)  shortages.
D)  overconsumption.

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.

Question 4

A public expenditure that has to be approved each year is called:

Accepted Answer

A)  discretionary spending.
B)  nondiscretionary spending.
C)  entitlement spending.
D)  earmarked spending.

Question 5

If Bob earns $20,000 a year and pays $2,000 in taxes,and Cindy earns $40,000 a year and pays $4,000 in taxes,there must be a _______________ tax in place.

Accepted Answer

A)  progressive
B)  regressive
C)  proportional
D)  lump-sum

Question 6

If the federal government brings in $1.1 trillion in tax revenues and spends $.7 trillion,the government has:

Accepted Answer

A)  a budget deficit of $.4 trillion.
B)  a budget surplus of $.4 trillion.
C)  a budget deficit of $1.8 trillion.
D)  a budget surplus of $1.1 trillion.

Question 7

The taxes used to pay for Social Security and Medicare are:

Accepted Answer

A)  payroll taxes.
B)  income taxes.
C)  sales taxes.
D)  corporate income taxes.

Question 8

It is difficult to balance the budget every year because:

Accepted Answer

A)  it is unlikely that revenues will exactly equal planned expenditures in any given year.
B)  political battles often cause blatant deficit spending that could be avoided.
C)  while economic downturns are easy to predict,booms are not.
D)  it is hard to get agreement on how to spend discretionary funds.

Question 9

Deadweight loss is minimized when a tax is levied on something for which people:

Accepted Answer

A)  are not likely to change their behavior much in response to a price change.
B)  are very likely to change their behavior in response to a price change.
C)  have a large income elasticity of demand.
D)  have a small income elasticity of demand.

Question 10

In general,more efficient taxes have:

Accepted Answer

A)  lower administrative burdens.
B)  are more complex.
C)  less revenues given the size of the tax.
D)  All of these statements are true.

Question 11

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.

Question 12

It is more likely at lower tax rates than higher tax rates that:

Accepted Answer

A)  the quantity effect will outweigh the price effect.
B)  the quantity effect will outweigh the income effect.
C)  the price effect will outweigh the quantity effect.
D)  the income effect will outweigh the price effect.

Question 13

The economic 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 benefits the most from of any sort of tax.
D)  who gains surplus as a result of the government redistributing tax revenue.

Question 14

An example of a tax-funded program is:

Accepted Answer

A)  public education.
B)  highways.
C)  housing to those in need.
D)  All of these are tax-funded programs.

Question 15

Over 90 percent of the U.S.government 's tax revenues come from:

Accepted Answer

A)  three sources.
B)  two sources.
C)  one single source.
D)  None of these is true.

Question 16

The concept of incidence is used to:

Accepted Answer

A)  describe who bears the burden of any sort of tax.
B)  indicate which tax bears the bigger burden.
C)  describe unexpected tax revenue generated.
D)  None of these statements is true.

Question 17

When considering the interplay of the price and quantity effect of different tax levels,we realize that:

Accepted Answer

A)  there is one tax level that maximizes tax revenues.
B)  tax revenues will continue to increase at all levels where the price effect outweighs the quantity effect.
C)  tax revenues will continue to decrease at all levels where the quantity effect outweighs the price effect.
D)  All of these statements are true.

Question 18

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

Accepted Answer

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

Question 19

The burden a tax places on buyers versus sellers is:

Accepted Answer

A)  independent of which side is charged for the tax.
B)  always split in half.
C)  never shared.
D)  None of these statements is true.

Question 20

An example of a lump-sum tax is:

Accepted Answer

A)  income tax.
B)  property tax.
C)  sales tax.
D)  None of these is an example of a lump-sum tax.

Exam 20: Taxation and the Public Budget

An example of a tax-funded program is:

Correct AnswerverifiedShow Answer

The economic incidence of the tax means:

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It is more likely at lower tax rates than higher tax rates that:

Correct AnswerverifiedShow Answer

The burden a tax places on buyers versus sellers is:

Correct AnswerverifiedShow Answer

Discretionary spending involves public expenditures that:

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One cost associated with the imposition of taxes is:

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The side of the market that will bear a greater share of the tax burden is the side that:

Correct AnswerverifiedShow Answer

The concept of incidence is used to:

Correct AnswerverifiedShow Answer

When considering the interplay of the price and quantity effect of different tax levels,we realize that:

Correct AnswerverifiedShow Answer

A public expenditure that has to be approved each year is called:

Correct AnswerverifiedShow Answer

In general,more efficient taxes have:

Correct AnswerverifiedShow Answer

If Bob earns $20,000 a year and pays $2,000 in taxes,and Cindy earns $40,000 a year and pays $4,000 in taxes,there must be a _______________ tax in place.

Correct AnswerverifiedShow Answer

An example of a lump-sum tax is:

Correct AnswerverifiedShow Answer

It is difficult to balance the budget every year because:

Correct AnswerverifiedShow Answer

The taxes used to pay for Social Security and Medicare are:

Correct AnswerverifiedShow Answer

Over 90 percent of the U.S.government 's tax revenues come from:

Correct AnswerverifiedShow Answer

If the federal government brings in $1.1 trillion in tax revenues and spends $.7 trillion,the government has:

Correct AnswerverifiedShow Answer

Deadweight loss is minimized when a tax is levied on something for which people:

Correct AnswerverifiedShow Answer

The administrative burden of a tax is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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