Question 1

Which of the following statements is FALSE about the issues faced by the government when contemplating a tax?

Accepted Answer

A)  Consideration must be given to how tax rates relate to the amount actually received.
B)  Consideration must be given to how taxes influence market prices.
C)  Consideration must be given to how taxes influence equilibrium quantity.
D)  Consideration must be given to the amount of funds the government will be receiving from the transfer payments paid by the public to the government.E) B) and C)
F) A) and B)

Question 2

Which of the following is an argument that the incidence of corporate taxation falls entirely on consumers?

Accepted Answer

A)  Corporations pass their tax burdens on to consumers by charging higher prices equal to the amount of the tax.
B)  Corporations pass their tax burdens on to consumers because consumers ultimately work for the corporations.
C)  Corporations always evade taxes so that consumers ultimately bear the tax burdens as taxpayers.
D)  Most taxes on consumers are collected by corporations through sales taxes.E) A) and C)
F) All of the above

Question 3

Suppose the tax rate on the first $10,000 income is 0 percent; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $30,000; and 40 percent on any income over $80,000. Family A has income of $40,000. What is the marginal and average tax rate for Family A?

Accepted Answer

A)  marginal-10 percent; average-10 percent
B)  marginal-20 percent; average-10 percent
C)  marginal-25 percent; average-20 percent
D)  marginal-20 percent; average-25 percentE) None of the above
F) B) and C)

Question 4

The marginal tax rate shows

Accepted Answer

A)  the percentage of income which a typical family pays in tax.
B)  the average rate of taxation in the economy.
C)  the deductions which are permitted for child care and medical expenses.
D)  the extra tax due on an extra dollar of income.E) C) and D)
F) B) and C)

Question 5

Explain why an increase in the tax rate can result in lower tax revenues.

Accepted Answer

According to dynamic tax analysis, consu...

Question 6

The federal income tax code of the United States is

Accepted Answer

A)  progressive.
B)  proportional.
C)  regressive.
D)  progressive for individuals but proportional for married couples.E) B) and D)
F) A) and B)

Question 7

-Refer to the above figure. A unit tax has been placed on the good. The consumer pays what amount of the tax?

Accepted Answer

A)  none of the tax
B)  P₂ - P₀
C)  P₂ - P₁
D)  P₁ - P₀E) A) and B)
F) C) and D)

Question 8

A tax rate system characterized by higher marginal tax rates as income increases is known as

Accepted Answer

A)  a progressive tax system.
B)  a regressive tax system.
C)  a proportional tax system.
D)  a flat-rate tax system.E) A) and D)
F) B) and C)

Question 9

A 5 percent tax is going to be applied to a $100,000 tax base. What can be said about the revenue collected assuming static tax analysis?

Accepted Answer

A)  The total revenue will be zero.
B)  The total revenue will be between $0 and $5,000.
C)  The total revenue will be $5,000.
D)  There is not enough information to determine what revenues will equal.E) A) and B)
F) All of the above

Question 10

A tax levied on purchases of a particular good or service

Accepted Answer

A)  is illegal because it is discriminatory.
B)  always leads to a reduction in total tax revenues.
C)  always leads to an increase in total tax revenues.
D)  is an excise tax.E) None of the above
F) A) and C)

Question 11

A tax levied on the purchase of a specific good or service is

Accepted Answer

A)  an excise tax.
B)  a consumption tax.
C)  a purchase tax.
D)  a value tax.E) B) and C)
F) A) and C)

Question 12

Jamal earns $160,000 per year and Josephina earns $80,000 per year. If Jamal pays $16,000 in income taxes and Josephina pays $5,000 in income taxes, the income tax system would be

Accepted Answer

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

Question 13

Which of the following is NOT an important source of revenue for the federal government?

Accepted Answer

A)  individual income taxes
B)  property taxes
C)  social insurance taxes and contributions
D)  corporate income taxesE) B) and D)
F) C) and D)

Question 14

Imposing a tax on sales of a product

Accepted Answer

A)  shifts the market demand curve for the product.
B)  shifts the market supply curve for the product.
C)  shifts both the market supply and demand curve for the product.
D)  has no effect on either the market demand or the market supply curve for the product.E) A) and B)
F) C) and D)

Question 15

Which one of the following statements is TRUE?

Accepted Answer

A)  In a proportional tax system, the marginal tax rate always exceeds the average tax rate.
B)  In a proportional tax system, the average tax rate always exceeds the marginal tax rate.
C)  The U.S. Social Security tax is proportional.
D)  The U.S. Social Security tax is regressive.E) All of the above
F) A) and B)

Question 16

Imposing a unit excise tax on the final sale of a good or service can be displayed graphically as

Accepted Answer

A)  a vertical shift upward of the demand curve.
B)  a vertical shift upward of the supply curve.
C)  a vertical shift downward of the demand curve.
D)  a vertical shift downward of the supply curve.E) None of the above
F) All of the above

Question 17

The marginal income tax rate applies to

Accepted Answer

A)  all income earned by a family.
B)  the income in the highest tax bracket reached.
C)  the income of the highest income U.S. taxpayers.
D)  the income received by people above the national average.E) A) and B)
F) A) and C)

Question 18

The responsibility of paying for the Social Security benefits for currently retired individuals falls on

Accepted Answer

A)  current and future workers.
B)  the retired people themselves.
C)  no one, since the government prints the money.
D)  only working people over 50 years of age.E) None of the above
F) B) and C)

Question 19

A unit tax

Accepted Answer

A)  is based on the value of the good being sold.
B)  is a constant tax assessed on each unit of a good sold.
C)  is the primary tax studied in dynamic tax analysis.
D)  does not influence equilibrium price and quantity.E) A) and B)
F) A) and C)

Question 20

How would the market for smartphones be affected if the government charged an excise tax of $5.00 on each smartphone sold?

Accepted Answer

A)  The supply of smartphones would decrease.
B)  The demand for smartphones would increase.
C)  The demand for smartphones would decrease.
D)  The price of smartphones would rise by $5.00.E) A) and C)
F) A) and B)

Exam 6: Funding the Public Sector

A 5 percent tax is going to be applied to a $100,000 tax base. What can be said about the revenue collected assuming static tax analysis?

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The federal income tax code of the United States is

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A unit tax

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Suppose the tax rate on the first $10,000 income is 0 percent; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $30,000; and 40 percent on any income over $80,000. Family A has income of $40,000. What is the marginal and average tax rate for Family A?

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Which of the following is NOT an important source of revenue for the federal government?

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A tax rate system characterized by higher marginal tax rates as income increases is known as

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Imposing a unit excise tax on the final sale of a good or service can be displayed graphically as

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Which one of the following statements is TRUE?

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Explain why an increase in the tax rate can result in lower tax revenues.

Correct AnswerverifiedAccording to dynamic tax analysis, consu...View AnswerShow Answer

Imposing a tax on sales of a product

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The marginal tax rate shows

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How would the market for smartphones be affected if the government charged an excise tax of $5.00 on each smartphone sold?

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Jamal earns $160,000 per year and Josephina earns $80,000 per year. If Jamal pays $16,000 in income taxes and Josephina pays $5,000 in income taxes, the income tax system would be

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Which of the following is an argument that the incidence of corporate taxation falls entirely on consumers?

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The marginal income tax rate applies to

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A tax levied on purchases of a particular good or service

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The responsibility of paying for the Social Security benefits for currently retired individuals falls on

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-Refer to the above figure. A unit tax has been placed on the good. The consumer pays what amount of the tax?

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Which of the following statements is FALSE about the issues faced by the government when contemplating a tax?

Correct AnswerverifiedShow Answer

A tax levied on the purchase of a specific good or service is

Correct AnswerverifiedShow Answer

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According to dynamic tax analysis, consu...
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