Question 1

An income tax system is ________ if marginal tax rates increase as income increases.

Accepted Answer

A)   progressive
B)   regressive
C)   efficient
D)   equitableE) A) and C)
F) None of the above

Question 2

Which of the following statements is true?

Accepted Answer

A)   If transfer payments such as Social Security payments to the retired and disabled were excluded from official statistics used to estimate the percentage of people with incomes below the poverty line, the amount of poverty in the United States would be much greater.
B)   Because the federal income tax system is progressive, measuring poverty using after-tax incomes results in a higher poverty rate than if poverty is measured using before-tax incomes .
C)   If non-cash benefits such as food stamps and rent subsidies were added to the incomes of low-income families, poverty would be eliminated.
D)   In the United States, income remaining after federal taxes are paid is more equally distributed than income before taxes.E) None of the above
F) All of the above

Question 3

According to projections for 2013 by the Tax Policy Center, the 20 percent of U.S. taxpayers who make the highest incomes

Accepted Answer

A)   use loopholes and tax exemptions to reduce their share of federal income taxes to less than 20 percent.
B)   pay almost 68 percent of federal income taxes.
C)   pay about 92 percent of federal income taxes but only about 20 percent of Social Security and Medicare payroll taxes.
D)   pay more in excise and other taxes than they pay in Social Security and Medicare payroll taxes.E) All of the above
F) A) and B)

Question 4

Figure 18-1 
-Refer to Figure 18-1. Area E + H represents

Accepted Answer

A)   the portion of sales tax revenue borne by consumers.
B)   the portion of sales tax revenue borne by producers.
C)   the excess burden of the sales tax.
D)   sales tax revenue collected by the government.E) A) and D)
F) A) and C)

Question 5

One result of the public choice model is that most economists believe that

Accepted Answer

A)   when market failure occurs, government intervention will always lead to a more efficient outcome.
B)   government intervention will always result in a reduction in economic efficiency in regulated markets.
C)   policymakers may have incentives to intervene in the economy in ways that do not promote economic efficiency.
D)   the voting paradox will prevent voters from selecting the best person for public office.E) All of the above
F) C) and D)

Question 6

Economists often analyze the interaction of individuals and firms in markets. Economists also examine the actions of individuals and firms as they attempt to use government to make themselves better off at the expense of others, a process that is referred to as

Accepted Answer

A)   rent seeking.
B)   logrolling.
C)   government failure.
D)   the public choice initiative.E) B) and D)
F) All of the above

Question 7

Which of the following is an example of rent seeking behavior?

Accepted Answer

A)   Apple earned large profits from the development and sale of the iPhone.
B)   Amazon introduced the Kindle to compete with Sony's Digital Reader. Amazon was motivated by the desire to earn profits from the Kindle but also increased the choice of digital music players available to consumers.
C)   U.S. sugar firms convinced Congress to impose a quota on imports of sugar.
D)   Recent increases in cigarette taxes faced little opposition from voters, many of whom were rationally ignorant with respect to the tax.E) B) and C)
F) B) and D)

Question 8

A study by the Congressional Budget Office (CBO)  regarding the corporate income tax included the following statement: "A corporation may write its check to the Internal Revenue Service for payment of the corporate income tax, but the money must come from somewhere..." The comments that followed this statement argued that

Accepted Answer

A)   corporations pass on some of the burden of the tax to investors in the company, to workers, and to consumers.
B)   the corporate income tax is a reliable source of revenue because corporations cannot avoid paying the tax.
C)   it is necessary to retain the tax because it is based on the ability-to-pay principle.
D)   the tax is more progressive than the individual income tax.E) B) and D)
F) B) and C)

Question 9

Why is a typical person likely to gather more information when buying a new car than when voting for a member of Congress?

Accepted Answer

A)   because a person's preferences are more likely to be met with little effort in the political sphere, but this is not the case when buying a car in the private marketplace
B)   because it is less costly to acquire information about consumer items than it is about political candidates
C)   because buying a new car affects a person more immediately and personally compared to voting for a member of Congress; in the latter, a person's vote is only one of many voters and therefore, not likely to have a large impact on the outcome
D)   because the effects of buying a car are long term while a member of Congress has a relatively short tenureE) C) and D)
F) B) and C)

Question 10

"For a given supply curve, the excess burden of a tax will be greater when the demand for a product is less elastic than when the demand is more elastic." This statement is

Accepted Answer

A)   correct.
B)   incorrect because the incidence of the tax, not the burden of the tax, is affected by the elasticity of demand.
C)   incorrect. When demand is less elastic, the burden of the tax is smaller than when the demand is more elastic.
D)   incorrect. The statement confuses demand with quantity demanded.E) C) and D)
F) B) and C)

Question 11

Some economists who use the public choice model to explain the ways government intervenes in the economy believe that regulatory capture results when an agency or commission is given authority over a particular industry or product. Which of the following is the best example of regulatory capture?

Accepted Answer

A)   The Food and Drug Administration (FD
A)   has increased the time and expense pharmaceutical firms incur to receive approval to market a new drug.
B)   A federal government agency hires more employees than it requires to regulate an industry because it does not seek to minimize costs or maximize the agency's profits.
C)   The head of an agency is required to testify before Congress because Congress controls the size of the agency's budget. Congress "captures" the agency because of its budget authority.
D)   Firms that were regulated by the Interstate Commerce Commission (IC
C)   attempted for many years to influence the ICC's actions.E) None of the above
F) A) and D)

Question 12

A situation where a member of Congress votes to approve a bill in exchange for favorable votes from other members on other bills is called

Accepted Answer

A)   rent seeking.
B)   logrolling.
C)   regulatory capture.
D)   special interest legislation.E) A) and B)
F) A) and C)

Question 13

Table 18-10
  Table 18-10 shows the income tax brackets and tax rates for single taxpayers in Bauxhall.
-Refer to Table 18-10. A tax exemption is granted for the first $10,000 earned per year. Suppose you earn $75,000.
a. What is the amount of taxes you will pay?
b. What is your average tax rate?
c. What is your marginal tax rate?

Accepted Answer

a. ($6,000 × 0.10) + ($14,000 ...

Question 14

Which of the following groups had the highest poverty rate in 2011 in the United States?

Accepted Answer

A)   Asians
B)   blacks
C)   Hispanics
D)   female heads of familiesE) All of the above
F) None of the above

Question 15

Table 18-6
  Table 18-6 shows the income tax brackets and tax rates for single taxpayers in Calpernia.
-Refer to Table 18-6. Calculate the income tax paid by Sasha, a single taxpayer with an income of $60,000.

Accepted Answer

A)   $22,800
B)   $14,399
C)   $13,800
D)   $13,642E) A) and D)
F) A) and C)

Question 16

Figure 18-1 
-Refer to Figure 18-1. Of the tax revenue collected by the government, the portion borne by producers is represented by the area

Accepted Answer

A)   B + C.
B)   F + G.
C)   E + H.
D)   B + C + F + G.E) All of the above
F) None of the above

Question 17

What is a Lorenz curve and what is a Gini coefficient?

Accepted Answer

A Lorenz curve is a curve that shows the...

Question 18

Table 18-3
 
-Refer to Table 18-3. The table above outlines the rankings of three members of the U.S. Senate on three spending alternatives. Assume that Congress can spend additional revenue on only one of the three spending alternatives and that Bart, Lisa, and Maggie, all members of the Senate, participate in a series of votes in which they are to determine which of the spending alternatives should receive funding. Three votes will be taken: (1) Immigration Reform and Unemployment Benefits (2) Immigration Reform and Social Security Reform and (3) Unemployment Benefits and Social Security Reform.
Show the results of each vote and determine whether the voting paradox will occur as a result of these votes.

Accepted Answer

First vote:

First vote: the majority v...

Question 19

The idea that individuals should be taxed in proportion to the marginal benefits that they receive from public goods is called

Accepted Answer

A)   the ability-to-pay principle.
B)   the horizontal-equity principle.
C)   the vertical-equity principle.
D)   the benefits-received principle.E) None of the above
F) C) and D)

Question 20

Many state governments use lotteries to raise revenue. If a lottery is viewed as a tax, is it most likely a progressive tax or a regressive tax? What information would you need to determine whether the burden of a lottery is progressive or regressive?

Accepted Answer

The lottery "tax" is generally considere...

Exam 18: Public Choice, Taxes, and the Distribution of Income

Which of the following groups had the highest poverty rate in 2011 in the United States?

Correct Answer
verified

A situation where a member of Congress votes to approve a bill in exchange for favorable votes from other members on other bills is called

Correct Answer
verified

"For a given supply curve, the excess burden of a tax will be greater when the demand for a product is less elastic than when the demand is more elastic." This statement is

Correct Answer
verified

Some economists who use the public choice model to explain the ways government intervenes in the economy believe that regulatory capture results when an agency or commission is given authority over a particular industry or product. Which of the following is the best example of regulatory capture?

Correct Answer
verified

Which of the following is an example of rent seeking behavior?

Correct Answer
verified

Many state governments use lotteries to raise revenue. If a lottery is viewed as a tax, is it most likely a progressive tax or a regressive tax? What information would you need to determine whether the burden of a lottery is progressive or regressive?

Correct Answer
verified
The lottery "tax" is generally considere...
View Answer

Figure 18-1 -Refer to Figure 18-1. Area E + H represents

Correct Answer
verified

According to projections for 2013 by the Tax Policy Center, the 20 percent of U.S. taxpayers who make the highest incomes

Correct Answer
verified

Table 18-6 Table 18-6 shows the income tax brackets and tax rates for single taxpayers in Calpernia. -Refer to Table 18-6. Calculate the income tax paid by Sasha, a single taxpayer with an income of $60,000.

Correct Answer
verified

Why is a typical person likely to gather more information when buying a new car than when voting for a member of Congress?

Correct Answer
verified

Correct Answer
verified
First vote:
First vote: the majority v...
View Answer

What is a Lorenz curve and what is a Gini coefficient?

Correct Answer
verified
A Lorenz curve is a curve that shows the...
View Answer

Figure 18-1 -Refer to Figure 18-1. Of the tax revenue collected by the government, the portion borne by producers is represented by the area

Correct Answer
verified

An income tax system is ________ if marginal tax rates increase as income increases.

Correct Answer
verified

Correct Answer
verified

Economists often analyze the interaction of individuals and firms in markets. Economists also examine the actions of individuals and firms as they attempt to use government to make themselves better off at the expense of others, a process that is referred to as

Correct Answer
verified

Correct Answer
verified
a. ($6,000 × 0.10) + ($14,000 ...
View Answer

One result of the public choice model is that most economists believe that

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

The idea that individuals should be taxed in proportion to the marginal benefits that they receive from public goods is called

Correct Answer
verified

Exam 18: Public Choice, Taxes, and the Distribution of Income

Which of the following groups had the highest poverty rate in 2011 in the United States?

Correct AnswerverifiedShow Answer

A situation where a member of Congress votes to approve a bill in exchange for favorable votes from other members on other bills is called

Correct AnswerverifiedShow Answer

"For a given supply curve, the excess burden of a tax will be greater when the demand for a product is less elastic than when the demand is more elastic." This statement is

Correct AnswerverifiedShow Answer

Some economists who use the public choice model to explain the ways government intervenes in the economy believe that regulatory capture results when an agency or commission is given authority over a particular industry or product. Which of the following is the best example of regulatory capture?

Correct AnswerverifiedShow Answer

Which of the following is an example of rent seeking behavior?

Correct AnswerverifiedShow Answer

Many state governments use lotteries to raise revenue. If a lottery is viewed as a tax, is it most likely a progressive tax or a regressive tax? What information would you need to determine whether the burden of a lottery is progressive or regressive?

Correct AnswerverifiedThe lottery "tax" is generally considere...View AnswerShow Answer

Figure 18-1 -Refer to Figure 18-1. Area E + H represents

Correct AnswerverifiedShow Answer

According to projections for 2013 by the Tax Policy Center, the 20 percent of U.S. taxpayers who make the highest incomes

Correct AnswerverifiedShow Answer

Table 18-6 Table 18-6 shows the income tax brackets and tax rates for single taxpayers in Calpernia. -Refer to Table 18-6. Calculate the income tax paid by Sasha, a single taxpayer with an income of $60,000.

Correct AnswerverifiedShow Answer

Why is a typical person likely to gather more information when buying a new car than when voting for a member of Congress?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedFirst vote: First vote: the majority v...View AnswerShow Answer

What is a Lorenz curve and what is a Gini coefficient?

Correct AnswerverifiedA Lorenz curve is a curve that shows the...View AnswerShow Answer

Figure 18-1 -Refer to Figure 18-1. Of the tax revenue collected by the government, the portion borne by producers is represented by the area

Correct AnswerverifiedShow Answer

An income tax system is ________ if marginal tax rates increase as income increases.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economists often analyze the interaction of individuals and firms in markets. Economists also examine the actions of individuals and firms as they attempt to use government to make themselves better off at the expense of others, a process that is referred to as

Correct AnswerverifiedShow Answer

Correct Answerverifieda. ($6,000 × 0.10) + ($14,000 ...View AnswerShow Answer

One result of the public choice model is that most economists believe that

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

The idea that individuals should be taxed in proportion to the marginal benefits that they receive from public goods is called

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The lottery "tax" is generally considere...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
First vote:
First vote: the majority v...
View Answer

Correct Answer
verified
A Lorenz curve is a curve that shows the...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. ($6,000 × 0.10) + ($14,000 ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified