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Exam 19: Public Finance: Expenditures and Taxes

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Question 31

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A progressive tax is such that:

A) tax rates are higher the greater one's income.
B) the same tax rate applies to all income receivers,so that the rich pay absolutely more taxes than the poor.
C) entrepreneurial income is exempt from taxation.
D) the revenues it yields are spent on transfer payments.

E) A) and C)
F) All of the above

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Question 32

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(Advanced analysis) Answer the question on the basis of the following information: The equations for the demand and supply curves for a particular product are P = 10 - .4Q and P = 2 + .4Q,where P is price and Q is quantity expressed in units of 100.After an excise tax is imposed on the product,the supply equation is P = 3 + .4Q. Refer to the given information.Government's revenue from this tax is:

A) $750.
B) $1,500.
C) $875.
D) $800.

E) A) and D)
F) A) and C)

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Question 33

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With respect to state finance,for most states:

The efficiency loss of a tax is the idea that:

Which of the following statements is most consistent with the benefits-received principle of taxation?

Government assumes some responsibility for providing a minimum standard of living for all citizens to compensate for the increase in income inequality caused by government tax revenues and expenditures.

The following data represent a personal income tax schedule.Answer the question on the basis of this information. $\begin{array} { c c } \text { Taxable Income } & \text { Total Tax } \\\hline\$ 0 & \$ 0 \\2,000 & 200 \\4,000 & 600 \\6,000 & 1,200 \\8,000 & 2,000 \\10,000 & 3,000\end{array}$ Refer to the table.If your taxable income is $8,000,your average tax rate is:

If the demand for a product is perfectly inelastic,the incidence of an excise tax will be:

Answer the question on the basis of the following five schedules,all of which represent income tax schedules for an economy.All figures are in billions of dollars. $\quad$ $\quad$ $\quad$ $\quad$ I $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ II $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ III $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ IV $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ V $\begin{array}{c}\begin{array}{c}\\\underline{\text { Tax} } \\ \$ 30 \\50 \\60 \\70\end{array}\begin{array}{c}\text { Base } \\\underline{\text { (Income) }}\\\$ 100 \\200 \\300 \\400\end{array}\begin{array}{c}\\\underline{\text { Tax } }\\ \$ 10 \\20 \\30 \\40\end{array}\begin{array}{c}\text { Base } \\\underline{\text { (Income) }}\\\$ 100 \\200 \\300 \\400 \end{array}\begin{array}{c}\\\underline{\text { Tax }} \\ \$ 5 \\15 \\30 \\50\end{array}\begin{array}{c}\text { Base } \\\underline{\text { (Income) }}\\\$ 100 \\200 \\300 \\400 \end{array}\begin{array}{c}\\\underline{\text { Tax }} \\\$ 30 \\60 \\90 \\120\end{array}\begin{array}{c}\text { Base } \\\underline{\text { (Income) }}\\\$ 100 \\200 \\300 \\400 \end{array}\begin{array}{c}\\\underline{\text { Tax} } \\\$ 10 \\30 \\60 \\100 \end{array}\begin{array}{c}\text { Base } \\\underline{\text { (Income) }}\\\$ 100 \\200 \\300 \\400 \end{array}\end{array}$ Which of the schedules represent(s) a proportional tax?

Answer the question on the basis of the following demand and supply data for a competitive market: $\begin{array}{c}\begin{array}{ccc}\text { Quantity Demanded } & \text { Price } \\\hline1,500 & \$ 10 \\2,000 & 9 \\2,500 & 8 \\3,000 & 7 \\3,500 & 6\\\end{array}\begin{array}{c}\text{Quantity Supplied}\\\hline3,500 \\3,000 \\2,500 \\2,000 \\1,500\end{array}\end{array}$ Refer to the given data.If government provides a per-unit subsidy of $2 to suppliers of this product,equilibrium price and quantity would be:

Entry fees at national parks and monuments are an example of:

Which of the following taxes is least likely to be shifted?

If you pay a $2,000 tax on $10,000 of taxable income and a $4,000 tax on a taxable income of $16,000,the tax is progressive.

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of supply of X is unitary (coefficient = 1) .If the incidence of the tax is such that the producers of X pay $1.90 of the tax and the consumers pay $.10,we can conclude that the:

Transfer payments are about ____ percent of U.S.domestic output (as of 2012) .

Answer the question on the basis of the following five schedules,all of which represent income tax schedules for an economy.All figures are in billions of dollars. $\quad$ $\quad$ $\quad$ $\quad$ I $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ II $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ III $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ IV $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ V $\begin{array}{c}\begin{array}{c}\\\underline{\text { Tax} } \\ \$ 30 \\50 \\60 \\70\end{array}\begin{array}{c}\text { Base } \\\underline{\text { (Income) }}\\\$ 100 \\200 \\300 \\400\end{array}\begin{array}{c}\\\underline{\text { Tax } }\\ \$ 10 \\20 \\30 \\40\end{array}\begin{array}{c}\text { Base } \\\underline{\text { (Income) }}\\\$ 100 \\200 \\300 \\400 \end{array}\begin{array}{c}\\\underline{\text { Tax }} \\ \$ 5 \\15 \\30 \\50\end{array}\begin{array}{c}\text { Base } \\\underline{\text { (Income) }}\\\$ 100 \\200 \\300 \\400 \end{array}\begin{array}{c}\\\underline{\text { Tax }} \\\$ 30 \\60 \\90 \\120\end{array}\begin{array}{c}\text { Base } \\\underline{\text { (Income) }}\\\$ 100 \\200 \\300 \\400 \end{array}\begin{array}{c}\\\underline{\text { Tax} } \\\$ 10 \\30 \\60 \\100 \end{array}\begin{array}{c}\text { Base } \\\underline{\text { (Income) }}\\\$ 100 \\200 \\300 \\400 \end{array}\end{array}$ Which of the schedules represent(s) a progressive tax?

A tax that takes a larger proportion of income from low-income groups than from high-income groups is a:

Federal employment in the United States is dominated by what two functions?

Government borrowing:

Assume that in year 1 your average tax rate is 20 percent on a taxable income of $20,000.If the marginal tax rate on the next $10,000 of taxable income is 30 percent,what will be the average tax rate if your taxable income rises to $30,000?