Unit 5 (Ch 12,13 & 14) Williamson ECON TCI

After the United States became independent, why were Americans cautious about taxation? A. Britain had taxed the colonies but gave them no say in how they were taxed. B. Britain retained the right to collect taxes from Americans after independence. C. Taxes were still being levied for the benefit of individual citizens, not for the common good. D. The Constitution gave the federal government unlimited power to tax Americans.

A. Britain had taxed the colonies but gave them no say in how they were taxed.

Mandatory spending includes interest on the national debt and A:A. entitlements. B:B. welfare benefits. C:C. defense. D:D. education.

A. Entitlements

The shortfall between tax revenues and the government expenditures in a given year is called the A:A. federal deficit. B:B. national debt. C:C. deadweight loss. D:D. tax incidence.

A. Federal Deficit

A tax on luxury items, such as a diamond necklace, is based on the A. ability-to-pay principle. B. benefits-received principle. C. deadweight loss principle. D. mandatory spending principle.

A. ability-to-pay principle.

What causes property taxes to change? A:A. changes in the assessed value of a property B:B. changes in the employment status of the property owner C:C. changes in the federal budget D:D. changes in the income of the property owner

A. changes in the assessed value of a property

Advocates who favor a proportional tax believe it is the fairest tax structure because A:A. everyone pays an equal share of the tax burden. B:B. it is based on the last dollar a person earns in a given year. C:C. it takes a smaller share of income as income increases. D:D. the wealthy pay more than the poor do.

A. everyone pays an equal share of the tax burden.

The largest share of tax revenue taken in by the federal government come from A:A. individual income taxes. B:B. payroll taxes. C:C. property taxes. D:D. sales taxes

A. individual income tax

Some states and localities allow citizens to play a larger role in tax policy through A:A. tax referendums. B:B. lotteries. C:C. discretionary spending. D:D. entitlements.

A. tax referend

in trillions, if household consumption is $9.7, business investment is $2.1, government purchases is $2.7, and net exports are -$0.7, the GDP is A:A. $4.2 trillion. B:B. $13.8 trillion. C:C. $15.2 trillion. D:D. $38.5 trillion.

B. 13.8 trillion

A city just imposed a new tax on restaurant meals. A café owner lowers her prices to keep costs to the customer low. The tax incidence falls on A. all taxpayers in the city. B. the café owner. C. the city council. D. the customers.

B. Cafe Owner

How does the federal government spend the revenue they raise from taxes? A:A. education B:B. entitlements C:C. public safety D:D. social welfare

B. Entitlements

Adam Smith's four tax maxims were certainty, convenience, efficiency, and A. complexity. B. equity. C. democracy. D. economy.

B. Equity

Which of the following is an example of how taxes are used to promote social goals? Text to speech A. Taxes fund the military, which protects our national interests overseas. :B. Taxes on cigarettes may discourage some people from using them. C. Taxes help government function by paying the salaries of government officials. D. Taxes make possible the building of infrastructure such as roads and bridges.

B. Taxes on cigarettes may discourage some people from using them.

Excise taxes are levied :A. on expensive luxury items, such as fur coats and private jets. B:B. on goods and services a government wants to regulate, such as alcohol and cigarettes. C:C. on real property, such as land and buildings, and personal property, such as cars and boats. D:D. on the assets left to heirs by someone who dies.

B. on goods and services a government wants to regulate, such as alcohol and cigarettes

Why is a sales tax considered to be a regressive tax? A:A. Sales tax does not have to be paid by people below a certain income level. B:B. Sales tax rates increase with rising incomes. C:C. Sales tax takes a smaller share of income as income increases. D:D. Sales tax takes the same share of income at all levels.

C. Sales tax takes a smaller share of income as income increases.

Two of the most important payroll taxes are A:A. excise tax and luxury tax. B:B. individual income tax and corporate income tax. C:C. Social Security tax and Medicare tax. D:D. property tax and sales tax.

C. Social Security tax and Medicare tax.

Almost 90 percent of the money to pay for education comes from A:A. the federal government. B:B. state governments. C:C. state and local governments. D:D. local governments.

C. State & Local

A deadweight loss occurs when A. a tax takes the same share of income at all income levels. B. people who benefit from a particular government program have to pay for it. C. the cost to consumers and producers from a tax is more than the tax revenue it generates. D. the economic burden of a tax falls on a producer instead of on a consumer.

C. the cost to consumers and producers from a tax is more than the tax revenue it generates.

The gross domestic product is A:A. the price buyers are willing to pay for a good or service in a competitive marketplace. B:B. a good that is used in the production of final goods, such as the grains used to produce cereal. C:C. the market value of all final goods and services produced within a country during a period of time. D:D. the value of all exports minus all imports.

C. the market value of all final goods and services produced within a country during a period of time.

What is an example of a tax based on the benefits-received principle? A. the higher rate of income tax that a successful lawyer pays B. the luxury tax that you have to pay on a designer wedding dress C. the toll you have to pay to drive on the Massachusetts Turnpike D. all of the above

C. the toll you have to pay to drive on the Massachusetts Turnpike

Which statement about corporate income taxes is true? A:A. Customers pay the cost of corporate income taxes in the form of higher prices. B:B. Employees pay the cost of corporate income taxes in the form of lower wages. C:C. Shareholders pay the cost of corporate income taxes in the form of smaller dividend checks. D:D. all of the above

D. All of the above

What action does the IRS take when it questions a taxpayer's return? A:A. It begins to withhold tax from each paycheck. B:B. It imposes a penalty tax rate on the taxpayer. C:C. It issue the taxpayer a W-2 form. D:D. It orders an audit of the return.

D. it orders and audit of the return

Taxes are

a mandatory payment to the gov, rarely popular, the price we pay for civilization (all of the above)