The long-term federal budget outlook is challenging because _______ steadily as a
percent of GDP.
A. tax revenue is projected to fall
B. low-income assistance is projected to rise
C. defense spending is projected to rise
D. Medicare plus Medicaid plus Social Security spending is projected to rise
Answer:
When premiums increase, in the short-run employers bear ___ of the burden until they
adjust ___.
A. some; wages
B. all; prices
C. none; wages
D. some; prices
Answer:
According to George Harrison of the Beatles, the top tax rate in Britain in the 1960s
was ___ because the Tax Man said, “There’s one for you, ___ for me.”
A. 95%; nineteen
B. 90%; nineteen
C. 95%; there’s nine
D. 90%; there’s nine
Answer:
Military protection of a valuable world resource such as oil is a global _____ good.
A. public
B. private
C. superior
D. inferior
Answer:
In several countries, including the U.S., the government’s choice of the earliest
eligibility age for social security benefits seems to have
A. no effect on when people retire.
B. a very small effect on when people retire.
C. a large effect on when people retire.
D. an educational, but not a behavioral, effect.
Answer:
Insurance transfers resources from the ___ to the ___.
A. rich; poor
B. insured; uninsured
C. uninsured; insured
D. healthy; sick
Answer:
Part A of Medicare for hospital care is funded by a payroll tax– ___ on the employer,
___ on the employee, ___.
A. 6.2%; 6.2%; up to a ceiling of $102,000
B. 1.45%; 1.45%; up to a ceiling of $102,000
C. 6.2%; 6.2%; on all wage income
D. 1.45%; 1.45%; on all wage income
Answer:
Charging polluters a price forces them to
A. externalize the internality.
B. internalize the externality.
C. externalize the externality.
D. internalize the internality.
Answer:
If H has twice the income of L and its MB curve is twice as high, then the optimal tax is
a ____ income tax.
A. progressive
B. proportional
C. regressive
D.comprehensive
Answer:
Suppose that with no tax, saving is $120,000, but with a 40% tax on savers’ capital
income, the interest rate is 5% and saving is $100,000. The efficiency loss is ___.
A. (1/2)(2%)($20,000)=$200
B. (1/2)(5%)($20,000)=$500
C. (2%)($20,000)=$400
D. (5%)($20,000)=$1,000
Answer:
A refundable tax credit is more ____ than the current tax exclusion.
A. progressive and efficient
B. progressive but not more efficient
C. regressive and efficient
D. regressive but not more efficient
Answer:
The federal income tax is progressive for ______.
A. low, middle, and high-income households
B. low, middle, but not high-income households
C. middle, high, but not low-income households
D. low, high, but not middle-income households
Answer:
Under a household consumption tax, the household would sum its _____ and subtract
its _______.
A. labor and capital income; charitable contributions
B. labor and capital income; non-consumption cash outflows
C. cash inflows; charitable contributions
D. cash inflows; non-consumption cash outflows
Answer:
The most effective grant for increasing activity X is ____.
A. a conditional block grant
B. an unconditional block grant
C. an open-ended categorical matching grant
D. a closed-ended categorical matching grant
Answer:
Under Social Security, the worker and employer each owe a tax equal to __% of wage
income up to a ceiling of ___ (in 2008).
A. 6.2%; $51,000
B. 6.2%; $102,000
C. 12.4%; $51,000
D. 12.4%; $102,000
Answer:
Under a collective workers support retirees system, ______.
A. BR = tWL
B. tBR = WL
C. BL = tWR
D. tBL = WR
Answer:
Suppose savers pay a tax on their capital income. In the market for saving, this tax ___.
A. shifts up the supply curve
B. shifts up the demand curve
C. shifts down the supply curve
D. shifts down the demand curve
Answer:
The EITC provides about ___ billion in assistance to about ___ million low-income
families.
A. $20; 40
B. $40; 20
C. $10; 60
D. $60; 10
Answer:
If profit is $55,000 in year 1 and $60,500 in year 2, then the present value of profit with
a 10% interest rate is ___.
Answer:
Draw the marginal abatement cost (MAC) line for each firm, H and L. With no policy,
each firm emits 120 tons of carbon. As H reduces its emissions from 120 to 0, its MAC
rises from $0 to $480; as L reduces its emissions from 120 to 0, its MAC rises from $0
to $120. The MD of a ton of carbon is $96. The tax per ton is T.
Answer:
The largest ($) government program that assists only low-income people is ______.
Answer:
The efficiency loss from a lump-sum tax T equals ___.
Answer:
When patients have 100% insurance, they order more medical care. Insurers call this
___, and economists call it ___.
Answer:
The strategy of consumer-driven health care uses a tax incentive to encourage
households to choose ______.
Answer:
Describe the Welfare Reform Act of 1996.
Answer:
In 2007, U.S. Treasury debt held by the public was ______.
Answer: