ch 10 government 6

Four main factors influence government taxation and spending​ decisions:

-Raising revenues ​- Redistributing funds via transfer payments ​- Financing operations ​- Correcting market failures and externalities

In a society approaching perfect equality​ (everybody having the same​ income), the Gini coefficient would be

0

Which of the following is an example of the opportunity cost of government​ bureaucracies?

A tax collector who was qualified to produce motherboards

The window tax is different from the U.S. income tax in that as windows​ increase,

Britain's window tax increases for all​ windows, and as income​ increases, the U.S. income tax rate increases on marginal income.

Which of the following is a cost associated with government intervention in an economic​ system?

Bureaucracies.

Which of the following functions is beyond the scope of economics as far as government intervention is​ considered?

To make a value judgment on whether government is good or bad.

Do you think from 1747-1757 the number of new homes with 9 or fewer windows increased from the​ pre-1747 days?

Yes, because the marginal cost of having more windows increased.

If government tax revenues are ​$6.9 trillion and government spending is $6.7 ​trillion, the government is running a

budget surplus

Government increases taxes as a result of a budget deficit

correcting market failures and externalities

A price ceiling placed below the equilibrium price would result in excess ? this is referred to as a ?

demand; shortage

The sources of revenue for state and local governments are ? those of the federal government.

different from

Direct regulation is

direct actions by the government to control the amount of an activity.

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

The tax paid while purchasing a cocktail at a bar is levied by

fed gov

Examples of direct regulation include

fishing quotas, antismoking laws, price ceilings

When tax rates​ increase, the deadweight loss of taxation increases by a ? amount.This implies​ that, all else being​ equal, it is better to have ? rather than ? tax source

greater, many small tax sources, one large

In competitive​ markets, tax​ incidence, as well as the​ equilibrium, is independent of whether the tax is imposed on consumers or sellers​ because:

if it is imposed on the​ seller, the seller will raise the price and pass it to the consumer

In an​ economy, if the government implements a law for individuals that requires them to save at least​ 25% of their annual income in a social savings plan framed by the government. For supporting this​ plan, the government raises revenues by implementing income tax rates that are higher compared to the other countries.

increase in deadweight loss; An increase in costs to the government.

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.

increase; increase

A progressive tax system is one in which tax rates ? as taxable base income increases. In a regressive tax​ system, higher earners pay ? marginal tax rates.

increase; lower

Which of the following is not a consequence of high levels of​ taxation?

increased immigration of foreign high earners

Educational grants afforded to poorer developing countries are​ often:

ineffective because government officials often misuse the funds.

Based on the income tax brackets in the table​ beside, an individual with an income of $75,000 would pay $10,788.45 in income taxes. In this case the​ individual's average tax rate is ? their marginal tax rate.

lower than

Which of the following is the largest source of revenue for state​ governments?

miscellaneous taxes and fees

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

Britain taxed windows from 1696 until 1851. Under the 1747-1757 tax​ rates, you would pay no tax if your home had 0-9 ​windows, but if your home had 10-14 windows you would pay a tax of 6 pence per window for every window in your home. The window tax is similar to the U.S. income tax in that both are​ ?

progressive taxes

Government issues bonds for the construction of a new plant that treats the waste products emitted from the big factories.

raising revenues

Given that there are costs involved with government intervention in an​ economy, governments still choose to intervene in markets to

reduce inequality

The​ equity-efficiency trade-off states that when social inequality is​ ?social surplus. The flatter the​ equity-efficiency curve, the ? the cost of reducing social inequality in terms of social surplus.

reduce, greater

This​ lump-sum income tax is a

regressive tax

Which of the following is not an example of​ paternalism?

repealing the Affordable Health Care Act

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 and local gov

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.

f the implementation of a price control results in a deadweight​ loss, which of the following statements is​ true?

there is excess demand

Black markets often ? the ban on illegal goods and services. Another facet of underground​ economies, tax​ evasion, ? legitimate businesses and can result in governments levying ? taxes.

undermine; harms; higher

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.

Government spending in the United States has grown over time and now accounts for more than 40 percent of U.S. national income. Does this mean that government has been consistently running a budget​ deficit?

​No, government deficits depend upon spending and tax revenue.

Government provides health services to individuals who are incapable of paying for it.

Redistributing funds via transfer payments.

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.

Which of the following is a factor underlying government taxation and spending​ decisions?

To raise revenues to pay for operations.

The two most important goals for government policy involve a​ trade-off between​

equity and efficiency

Which of the following arguments is not consistent with​ paternalism?

Individuals make choices that reflect their true preferences and know what is best for them.

The largest source of revenue for the federal government is​

individual income tax

? represent the largest portion of the money the U.S. government collects in tax revenues. ? tax receipts represent a third of the federal​ government's tax revenue and are taxes on ?

individual income taxes, social insurance tax, wages

Many people have argued that an income tax should be​ "marriage neutral," that​ is, two people should pay the same total tax whether they are married or they are single. Suppose Amanda earns​ nothing, Ben earns​ $60,000, and Cathy and Dylan each earn​ $30,000. They are all single. -Amanda pays no tax because she has no income. If they all live in a country that has a progressive income​ tax, which will be​ higher: the tax that Ben pays or the sum of the taxes Cathy and Dylan​ pay? -Amanda marries Ben and Cathy marries Dylan. This country taxes married couples based on a​ family's total income. Amanda and Ben will pay the same tax as Cathy and Dylan because​ -Is the income tax in this country marriage​ neutral?

The tax that Ben pays because​ high-income individuals pay higher income taxes; the couples have the same family income; ​No, because Cathy and Dylan pay higher taxes when married than before marriage.

Government increases taxes in order to pay the salary of the doctors working in government owned hospitals.

financing operations

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.