Chapter 3 Taxes Economics Test

Multiple Choice: Elected representatives approve legislation but the task of implementing that legislation typically is delegated to A: bureaus B:the courts C: public committees D: law enforcement

A

Multiple Choice: If Jane's tax liability grows from $3,000 to $4,000 when her income increases from $30,000 to $35,000, the tax system is A: progressive B:regressive C: proportional

A

Multiple Choice: The efficient level of a public good is found where ____ providing the good. A: the sum of its marginal benefits equals the marginal cost of B: its total benefits equal the total cost of C: the sum of its marginal benefits equal the total cost of D: its total benefits equal the marginal cost of

A

Multiple Choice: People can ____ if they do not like the political policies in the area where they live A: write letters of complaint to their local paper B: vote with their feet and leave the area C: refuse to pay their taxes D: complain to the federal government

B

Multiple Choice: The US system of federal, state, and local governments consists of more than _____governments in all A 1 million B: 350,000 C: 87,000 D: 125,000

C

Multiple Choice: The ___ to the U.S Constitution empowered Congress to levy a tax on personal income A: Tenth Amendment B:Thirteenth Amendment C:Sixteenth Amendment D: 23rd Amendment

C

Multiple Choice: The state spends most of its funds on A: police and prisons B: welfare C: schools D: aid to local government

D

Multiple Choice: Which of the following is most clearly an example of a benefits-received principle tax? A:an excise tax on gasoline: B a sales tax on clothing C: the federal income tax D: a fee charged to enter a national park

D

Multiple Choice: Which of the following would be the easiest for a politician to support? A: a proposal to increase taxes to reduce the deficit B: a proposal to reduce school aid to help balance the budget C: a proposal to increase gasoline taxes to pay for better roads D:a proposal to cut tax rates on personal income

D

Multiple Choice: Which of these services would a government most likely to contract from private businesses? A: police protection B: traffic court C: national defense D: trash collection

D

True or False: All states impose a general sales tax

False

True or False: During the nation's first 150 years, federal spending consistently amounted to about 10 percent of GDP

False

True or False: The federal government relies on the corporate income tax for most of its tax revenue

False

True or False: Voters who are not satisfied with the federal government can easily vote with their feet

False

Fill in the Blank: The ____ tax rate indicates the percentage of each additional dollar of a taxpayer's income that goes to taxes

marginal

the percentage of each additional dollar of income that goes to pay a tax

marginal tax rate

the objective assumed to guide the behavior of elected officials, comparable to profit maximization

maximizing political support

taxes deducted from paychecks to support social security and medicare

payroll taxes

The tax as a percentage of income remains constant as income increases; also called a flat tax

proportional taxation

A stance adopted by voters when they find that the cost of understanding and voting on a particular issue exceeds the benefit expected from doing so

rational ignorance

the tax as a percentage of income decreases as income increases

regressive taxation

Fill in the Blank: In theory, the rule is one person, one ___, regardless of income in the US political systm

vote

The tax as a percentage of income increases as income inceases

Progressive taxation

True or False: A number of studies find that private businesses often are more efficient than government agencies

True

True or False: Before the Depression, local government accounted for half of all government spending

True

True or False: Economist assume that elected representatives make decisions that are intended to maximize their political support, including votes and campaign contributions

True

True or False: In the US more than 4,000 PACs try to shape federal legislation

True

True or False: Public goods are nonrival so each member of the public benefits from them equally

True

True or False: The leading use of local tax is spending for education

True

Fill in the Blank: Income and property taxes usually rely on the ___ approach.

ability to pay

those with a greater ability to pay are taxed more

ability to pay tax principle

relates taxes to the benefits taxpayers receive from a public good

benefits received tax principle

government agencies charged with implementing legislation and financed through legislative bodies

bureaus

Fill in the Blank: The ____ level of a public good is found where the sum of the marginal benefits equals the marginal cost of providing the good

efficiency level

a plan for government spending and revenues for a specified period, usually a year

government budget