Module 10 homework
Which of the following does a income tax rate refer to?
A percentage of income
Which of the following statements is correct about the U.S. tax system?
Payroll taxes include Social Security and Medicare taxes.
When tax rates increase, the deadweight loss of taxation increases by _______ This implies that, all else being equal, it is better to have _______ rather than ______
a greater amount, many small tax sources, one large tax source
If government tax revenues are $6.76.7 trillion and government spending is $5.75.7 trillion, the government is running _____
budget surplus
If the federal government's expenditures are less than its revenue, there is a __________.
budget surplus
The incidence of the tax falls entirely on producers because ____________.
consumers are infinitely price sensitive.
Government increases taxes as a result of a budget deficit.
correcting market failures and externalities
The two most important goals for government policy involve a trade-off between __________ and __________.
equity, efficiency
A price floor placed below the equilibrium price would _______ the market. If the price floor was set above the equilibrium price it would _______ the market. A price floor reallocates surplus to ________
have no effect, create a surplus, producers
Economists toward the paternalistic end of the spectrum would probably say that some mistakes result from the fact that:
individuals are not used to making decisions of a certain type.
A tax is efficient if it imposes __________ .
no deadweight loss
The federal income tax in the United States is a __________.
progressive tax
This lump-sum income tax is a
regressive tax
the social security tax is an example of _____
regressive tax
Tax incidence refers to __________.
the actual division of the tax between buyers and sellers in a market
Suppose a country has a flat income tax of 24%. John has earnings of $100,000 and Maria has earnings of $60,000. John's average tax rate is _____ percent and Maria's average tax rate is _____ percent. (Enter your responses as integers.)
24%
Which of the following is an example of the opportunity cost of government bureaucracies?
A tax collector who was qualified to produce motherboards
Which of the following is not a factor that influences government taxation and spending decisions? A. Correcting post-tax income distribution B. Redistributing funds via transfer payments C. Correcting market failures and externalities D. Raising revenues
A. Correcting post-tax income distribution
What does a deadweight loss from a tax consist of?
Buyers who must leave the market because they can't afford to pay the higher price and sellers who must leave the market because they can't produce at a lower price.
In competitive markets, tax incidence, as well as the equilibrium, is independent of whether the tax is imposed on consumers or sellers because: A. if it is imposed on the seller, the seller will lower the price and pass it to the consumer. B. if it is imposed on the consumer, the consumer will lower the price to pay the tax. C. if it is imposed on the consumer, the consumer will raise the price to pay the tax. D. if it is imposed on the seller, the seller will raise the price and pass it to the consumer.
D. if it is imposed on the seller, the seller will raise the price and pass it to the consumer.
Educational grants afforded to poorer developing countries are often: A. effective because they greatly increase the literacy rate. B. ineffective because the citizens often misuse the funds. C. effective because they redistribute funds away from corrupt western powers. D. ineffective because government officials often misuse the funds.
D. ineffective because government officials often misuse the funds
Which of the following statements about U.S. government revenues is correct?
Federal revenues have ranged between 25 and 30 percent of GDP for a long time.
Which of these statements about the effect of taxes and transfers on income distribution is correct?
Income after taxes is more equally distributed than income before taxes.
Criminals spend vast resources trying to avoid taxes and regulations, break laws, and undermine bans and, in turn, authorities spend resources to catch criminals. What does this reflect?
Problems generated by the underground economy.
Government provides health services to individuals who are incapable of paying for it.
Redistributing funds via transfer payments.
Which of the following corresponds to revenues at the state level of government?
Revenues mainly redistributed from the Federal government, sales tax, and property tax.
Which of the following is the marginal tax rate?
The fraction of each additional dollar of income that must be paid in taxes.
If the last dollar of income earned by individuals with the highest incomes is taxed at a rate that is less than the average tax rate, which of the following is correct?
The income tax is a regressive income tax.
In an economy, there is a high level of social inequality. This causes the government to implement a wealth tax on its citizens who earn a high level of income and, therefore, are capable of holding assets. Which of the following is not a result of the implementation of the wealth tax?
The increase in consumer surplus and decrease in social inequality.
How is the U.S. federal income tax structured?
The rate at which income is taxed increases as income increases.
Which of the following is the average tax rate?
The total tax paid divided by total income
Which of these best represents a tax equal to the value of the negative externality?
The vertical distance between S1 and S2.
Which of the following statements is not true regarding the concepts of corruption and the underground economy?
There is an increase in deadweight loss.
If the implementation of a price control results in a deadweight loss, which of the following statements is true?
There is excess demand.
There is an increase in the quality of the education system in an economy at low costs. The government also announces unemployment benefits and pension programs. These changes made by the government will lead to ______
a trade-off between equity and efficiency.
In an economy with an equity-efficiency trade-off, the newly elected government implements proportional taxes and plans to have a lesser hold on consumer choice. This will lead to ______, in efficiency and _______ in social inequality compared to the existing level of social inequality in the economy.
an increase, an increase
Which of the following terms corresponds to a market where buying and selling take place at prices that violate government price regulations?
black market
Economies with lower taxes _______ production and ______ available social surplus. One possible cost of such economies is that the gap between the rich and poor may _____
encourage, increase, increase
Government increases taxes in order to pay the salary of the doctors working in government owned hospitals.
financing operations
Black markets may arise if:
price ceilings exist
There is a possibility of forming a black market by the seller, if there is a ______
price control
A legally determined minimum price that sellers must receive is known as a:
price floor
In an economy, the government sets a price control for a good. The suppliers notice that due to this price control, the consumers buy less of their good causing their inventories to rise. This price control set by the government is known as ______
price floor
Government issues bonds for the construction of a new plant that treats the waste products emitted from the big factories.
raising revenues
When the elasticity of demand for a product is __________ the elasticity of supply, consumers pay __________ of the tax on the product.
smaller than, more than half
1.) Dereck sold his shop to Jazz who wants to open a new salon. Dereck had to pay taxes on the sale of his shop. This tax is levied by
state a local governments
The actual division of the tax burden between buyers and sellers is known as:
tax incidence
2.) The tax paid while purchasing a cocktail at a bar is levied by
the federal government
3.) ABC Ltd., is an international company that pays taxes every year on its profits. This particular tax is levied by
the federal, state, and/or local governments
FDA regulations aimed at ensuring that new drugs that are marketed do, in fact, have the functions they are supposed to have are necessary because:
verification by each consumer would be extremely inefficient.
