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20-136
Price Per Unit
Quantity Demanded
Quantity Supplied
$1
50
10
2
40
20
3
30
30
4
25
40
5
20
50
6
15
60
7
10
70
The table gives data for the market for a product. If an excise tax of $3 per unit is imposed on
this product, the tax revenue for the government will be
D. $70.
266. In designing taxes, the government economists might focus on the following goals, except
A. minimizing efficiency losses.
267. The tax that is most difficult to shift to others would be
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written consent of McGraw-Hill Education.
A. the personal income tax.
B. the corporate income tax.
C. specific excise taxes.
D. business property taxes.
268. The actual incidence of payroll taxes, in the consensus view, is
A. split evenly between the worker and the employer.
269. The federal tax system is
A. proportional, while state and local tax structures are largely progressive.
20-138
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distribution of income between rich and poor is affected by government taxes, transfers, and
spending.
Test Bank: II
Topic:
Probable Incidence of U.S. Taxes
270. In 2013, the top 5 percent of income-tax filers paid what portion of the total U.S. federal
income tax?
D. more than 80 percent
271. The federal payroll (Social Security) tax
A. increases the progressivity of the federal tax system.
272. If the taxes by state and local governments were combined with the federal tax system, the
overall tax structure in the U.S. would best be characterized as
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B. highly regressive.
C. slightly regressive.
D. proportional.
273. Which of the following statements about specific excise taxes is true?
A. These taxes are levied on a wide range of consumer goods.
274. Which statement best describes the overall tax and transfer systems of the United States?
A. Our tax system makes the after-tax distribution of income much more equal than the before-
tax distribution.
20-140
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Blooms: Understand
Difficulty:
02 Medium
Learning Objective: 20-08 Discuss the probable incidence of U.S. taxes and how the
distribution of income between rich and poor is affected by government taxes, transfers, and
spending.
Test Bank: II
Topic:
Probable Incidence of U.S. Taxes
275. Economists Chamberlain and Prante of the Tax Foundation note that if the U.S. population
in 2012 were grouped into quintiles by income,
A. only the top income quintile paid more in taxes than the benefits they received from
government spending.
276. The U.S. tax and transfer study done by economists Chamberlain and Prante of the Tax
Foundation notes that in 2012 households in the top income quintile received about
A. 75 cents in government spending for every dollar they paid in taxes.
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spending.
Test Bank: II
Topic:
Probable Incidence of U.S. Taxes
277. Which of the following is necessarily true if the government were to replace a progressive
income tax system with a proportional one?
A. Lower income groups would pay less tax.
True / False Questions
278. The government is like business firms in that it provides goods and services to households
and businesses.
279. Between the government and households, money or funds tend to flow only in one
direction: from households to government.
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AACSB: Knowledge Application
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Apply
Di f f icul t y:
03 Hard
Learning Objective: 20-01 Use a circular flow diagram to illustrate how the allocation of
resources is affected by governments revenue and expenditure decisions.
Test Bank: II
Topic:
Government and the Circular Flow
280. Just like businesses, the public sector uses resources in order to produce goods and
services.
281. Transfer payments are "exhaustive" in that they directly absorb resources, whereas
government purchases are "nonexhaustive."
282. When the government is doing "deficit spending," it will be increasing its total debt.
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Diffi c u l t y:
01 Easy
Learning Objective: 20-02 Identify the main categories of government spending and the main
sources of government revenue.
Test Bank: II
Topic:
Government Finance
283. From 1960 to 2015, government purchases in the United States have shrunk as a
percentage of GDP, but transfer payments have expanded greatly.
284. The largest category of federal government expenditures is national defense.
285. Payroll taxes account for more than one-third of federal tax revenues.
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Topic:
Federal Finance
286. The interest on public debt is more than 10 percent of federal government expenditures.
287. Corporate income taxes contribute more to federal tax revenues than do personal income
taxes.
288. The largest source of tax revenue for state governments is the property tax.
289. Only a few states use state-run lotteries to increase their revenues and pay for
expenditures.
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FALSE
290. Education is the largest expenditure item for state governments as well as local
governments in the U.S.
291. More than 50 percent of local and state employees are employed in the education sector.
292. The largest portion of federal employees work in the national defense sector.
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written consent of McGraw-Hill Education.
Learning Objective: 20-05 Discuss the magnitude and distribution across job categories of
government employment at the local, state, and federal levels.
Test Bank: II
Topic:
Local, State, and Federal Employment
293. If an income tax is progressive, the average tax rate will increase as incomes increase.
294. The levying of licensing fees for automobiles is an example of taxation based on the
ability-to-pay principle.
295. The Social Security tax is regressive because it applies only on income below a "cap"
income level.
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Topic:
Apportioning the Tax Burden
296. The probable incidence of the tax on business property is on consumers.
297. In general for an excise tax on a product, given supply, the more elastic is the demand for
the product, the larger will be the portion of the tax shouldered by the buyers.
298. When an excise tax or sales tax is imposed on a product, the sellers are always able to shift
the burden of the tax on to the buyers.
299. The overall tax structure of the United States is proportional or slightly regressive.
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300. The state and local tax structure is largely progressive.
301. In the U.S., the progressive income-tax system substantially redistributes income.
302. In the U.S., the taxes mostly come from the rich and government spending mostly goes to
programs that benefit the rich.
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FALSE
