Question 1

Policymakers have the ability to affect:

Accepted Answer

A)  the economic incidence of a tax burden on the buyer and seller.
B)  the relative economic incidence of the tax burden on the rich and the poor.
C)  whether the buyer or seller will bear the actual burden of the tax.
D)  how the tax is shared between buyer and seller.E) B) and C)
F) None of the above

Question 2

When taxes are __________,tax revenues may __________.

Accepted Answer

A)  increased;increase
B)  decreased;decrease
C)  increased;decrease
D)  All of these statements are true.E) None of the above
F) B) and C)

Question 3

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) B) and C)
F) All of the above

Question 4

A regressive tax:

Accepted Answer

A)  takes the same percentage of taxes from income from all taxpayers.
B)  requires those with low incomes to pay a smaller percentage of their income than high-income people.
C)  is levied in such a way that low-income taxpayers pay a greater proportion of their income toward taxes than do high-income taxpayers.
D)  None of these statements is true.E) None of the above
F) A) and C)

Question 5

Considering a given increase in price due to a tax,the more price elastic the supply curve is,the:

Accepted Answer

A)  larger the drop in equilibrium quantity.
B)  smaller the drop in equilibrium quantity.
C)  smaller the amount of deadweight loss created.
D)  less surplus that is transferred to consumers.E) A) and B)
F) A) and C)

Question 6

When a tax is present in a market,the price paid by consumers:

Accepted Answer

A)  equals that received by suppliers,but it is higher than the market price in the absence of taxes.
B)  is greater than that received by suppliers.
C)  is less than that received by suppliers.
D)  equals that received by suppliers,but it is lower than the market price in the absence of taxes.E) A) and C)
F) All of the above

Question 7

All taxes carry which of the following costs?

Accepted Answer

A)  Time in creating procedures for collecting revenues
B)  Enforcing tax payments
C)  Managing collected funds
D)  All taxes incur all of these costs.E) A) and D)
F) C) and D)

Question 8

The administrative burden of taxes is:

Accepted Answer

A)  the same across all types of taxes.
B)  smaller the smaller the amount of tax.
C)  larger the smaller the amount of tax.
D)  None of these statements is true.E) All of the above
F) B) and C)

Question 9

The __________ tells us when the government raises taxes,the higher tax rate causes fewer units to be sold.

Accepted Answer

A)  quantity effect
B)  price effect
C)  government spending effect
D)  quality effectE) None of the above
F) A) and B)

Question 10

During a time of an economic downturn,it is likely that projected tax revenues will __________ than anticipated,and expenditures will _______ than anticipated.

Accepted Answer

A)  be lower;be higher
B)  be higher;be higher
C)  be lower;be lower
D)  be higher;be lowerE) A) and B)
F) None of the above

Question 11

An example of a tax-funded program primarily intended to stimulate economic growth is:

Accepted Answer

A)  the maintenance of public highways.
B)  the provision of housing to those in need.
C)  the provision of basic healthcare.
D)  All of these programs are intended to stimulate economic growth.E) A) and B)
F) B) and D)

Question 12

To calculate tax revenue:

Accepted Answer

A)  multiply the tax per unit by the number of units of the item being taxed.
B)  divide total revenues by the tax per unit.
C)  multiply total revenues by the tax per unit.
D)  None of these will calculate tax revenue.E) B) and C)
F) C) and D)

Question 13

The Social Security system:

Accepted Answer

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

Question 14

How much deadweight loss a tax causes depends on:

Accepted Answer

A)  how responsive buyers and sellers are to a price change.
B)  how much tax revenue the government generates.
C)  whether the tax is imposed on the buyer or seller.
D)  It can depend on all of these.E) None of the above
F) All of the above

Question 15

The Laffer curve demonstrates that raising tax rates:

Accepted Answer

A)  increases then decreases tax revenues.
B)  always increases tax revenues.
C)  always decreases tax revenues.
D)  decreases then increases tax revenues.E) A) and B)
F) C) and D)

Question 16

When considering different tax levels,the revenue-maximizing point will be reached more:

Accepted Answer

A)  quickly the more elastic is demand.
B)  slowly the more elastic is demand.
C)  quickly the less elastic is demand.
D)  None of these statements is necessarily true.E) All of the above
F) A) and C)

Question 17

Instead of trying to balance the budget every year,it is easier to:

Accepted Answer

A)  balance the budget over the business cycle.
B)  allow deficit spending only in times of economic downturn.
C)  allow surpluses to build during times of economic booms.
D)  All of these statements are true.E) B) and C)
F) A) and D)

Question 18

If the ________ effect is greater than the ___________ effect,a tax cut will increase revenues.

Accepted Answer

A)  quantity;price
B)  price;quantity
C)  quantity;income
D)  income;priceE) A) and C)
F) B) and D)

Question 19

When a tax is imposed and some of the lost surplus becomes tax revenues,the group that benefits is:

Accepted Answer

A)  consumers.
B)  producers.
C)  recipients of government services.
D)  Only the government benefits from that lost surplus.E) B) and C)
F) All of the above

Question 20

Taxes change behavior because they:

Accepted Answer

A)  alter the incentives faced by market participants.
B)  drive a wedge between the price paid by buyers and the price received by sellers.
C)  result in a lower equilibrium quantity of the good or service being consumed.
D)  All of these statements are true.E) B) and C)
F) None of the above

Exam 20: Taxation and the Public Budget

The __________ tells us when the government raises taxes,the higher tax rate causes fewer units to be sold.

Correct AnswerverifiedShow Answer

During a time of an economic downturn,it is likely that projected tax revenues will __________ than anticipated,and expenditures will _______ than anticipated.

Correct AnswerverifiedShow Answer

When a tax is imposed and some of the lost surplus becomes tax revenues,the group that benefits is:

Correct AnswerverifiedShow Answer

To calculate tax revenue:

Correct AnswerverifiedShow Answer

All taxes carry which of the following costs?

Correct AnswerverifiedShow Answer

When a tax is present in a market,the price paid by consumers:

Correct AnswerverifiedShow Answer

If the ________ effect is greater than the ___________ effect,a tax cut will increase revenues.

Correct AnswerverifiedShow Answer

The administrative burden of taxes is:

Correct AnswerverifiedShow Answer

Considering a given increase in price due to a tax,the more price elastic the supply curve is,the:

Correct AnswerverifiedShow Answer

The Social Security system:

Correct AnswerverifiedShow Answer

The Laffer curve demonstrates that raising tax rates:

Correct AnswerverifiedShow Answer

Instead of trying to balance the budget every year,it is easier to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Policymakers have the ability to affect:

Correct AnswerverifiedShow Answer

How much deadweight loss a tax causes depends on:

Correct AnswerverifiedShow Answer

When taxes are __________,tax revenues may __________.

Correct AnswerverifiedShow Answer

Taxes change behavior because they:

Correct AnswerverifiedShow Answer

When considering different tax levels,the revenue-maximizing point will be reached more:

Correct AnswerverifiedShow Answer

A regressive tax:

Correct AnswerverifiedShow Answer

An example of a tax-funded program primarily intended to stimulate economic growth is:

Correct AnswerverifiedShow Answer

Correct Answer
verified

During a time of an economic downturn,it is likely that projected tax revenues will ____ than anticipated,and expenditures will _ than anticipated.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

If the effect is greater than the ___ effect,a tax cut will increase revenues.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

When taxes are ,tax revenues may .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified