AGEC 203 Chapter 10

Which of the following is not an example of​ paternalism? A. public schools B. FDA warnings on all drugs C. repealing the Affordable Health Care Act D. a sin tax on tobacco

C

The view that consumers do not always know what is best for​ them, and that the government should encourage them to modify their​ behavior, is known as​ ________. A. the welfare state B. consumer sovereignty C. equity−efficiency trade−off D. paternalism

D

How would you depict the​ trade-off between equity and efficiency on a​ graph?

Inequality on one axis and social surplus on the other with a​ positively-sloped function.

The deadweight loss due to a​ ________ is always smaller than the deadweight loss due to a​ ________.

lump-sum tax; tax on each unit bought

The government runs a budget surplus when​ ____________.

tax revenue exceeds its spending

a black market is also known as an ________ economy

underground

Which of the following are examples of inefficiencies created by government​ intervention? ​(Check all that apply​.) A. Quality deterioration in a market after government implements a price control. B. Creating a large workforce of professionals who review whether the financial reports of companies are true and fair. C. Causing a rise in inflation due to an expansionary fiscal policy of the government. D. An increase in the price of alcohol due to higher taxes imposed by the government.

A and B

Which of the following accounts for the largest portion of federal government​ spending? A. Education B. National defense C. Policing D. Infrastructure

B

Which of the following is true in the United​ States? A. Only state governments can collect taxes. B. The central and local governments collect taxes. C. Only the federal government can collect taxes. D. Local governments cannot collect taxes.

B

Which of the following is true of welfare​ states? A. A welfare state usually has a regressive tax system. B. A welfare state entails a huge cost on society. C. Resources are efficiently allocated in a welfare state. D. Resources are not equally distributed in a welfare state.

B

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 raise the price to pay the tax. C. 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​ consumer, the consumer will lower the price to pay the tax.

C

​Lump-sum taxes are regressive. Is the deadweight loss of taxation the same for different types of​ taxes? A. ​No, it differs according to whether consumers or producers pay the tax. B. ​Yes, because all taxes distort behavior. C. ​No, it differs according to how taxes change incentives. D. ​Yes, because the tax incidence is the same for all taxes.

C

An increase in the income tax rate leads to a large increase in deadweight loss if​ ________. A. the labor demand curve is perfectly inelastic B. the labor demand curve is elastic C. the labor supply curve is perfectly inelastic D. the labor supply curve is highly elastic

D

The sources of revenue for state and local governments are different from those of the federal government. Which of the following is the largest source of revenue for state​ governments? A. Individual​ (federal) income tax. B. Sales tax. C. Property tax. D. Miscellaneous taxes and​ fees, such as tolls on roads and public transportation tickets.

D

Which of the following is not a result of​ corruption? A. Using a lesser proportion of the total assigned amount of money for public projects. B. Using public funds for increasing personal wealth. C. Inequality in the distribution of resources. D. Selling goods at a price that does not include taxes.

D

If government tax revenues are ​$6.86.8 trillion and government spending is ​$5.95.9 ​trillion, the government is running a

budget surplus

A price ceiling placed below the equilibrium price would result in excess __________. This is referred to as a _________.

demand, shortage

The largest source of revenue for the federal government is

individual income taxes