Chapter 4 Quiz

The top 1% of American income-earners pay approximately ____ of all federal income taxes. 1% 10% 20% 40%

40%

Using the table below, answer the question that follows the table: Income Tax $10,000 $1,000 20,000 4,000 30,000 10,000 The "marginal tax rate" in going from $20,000 to $30,000 of income is _________. 10% 20% 30% 60%

60%

Spending on a public good such as national defense ___________ increase with the birth of a new baby. does greatly does slightly does not night or might not

does not

Many factors determine an individual's income, but the most important factor(s) seems to be _______________. race age inheritance education, skills, and knowledge

education, skills, and knowledge

A ____________ externality exists when third parties are benefited by a transaction that they did not directly undertake. negative neutral positive marginal

positive

_____________ taxation is present when marginal (additional) tax rates increase with additional income. progressive regressive proportional marginal

progressive

Check all of the following that are true. Some of the things Congress and the President need to consider when changing tax rates are inflation, automation, and "fairness" The Smoot-Hawley Tariff Act raised import tax rates during the Great Depression but led to lower revenue from those tariffs The government generates zero tax revenue at both the zero percent tax rate and the 100 percent tax rate, as shown in the Laffer curve A certain level of taxes is necessary, but raising tax rates retards economic growth

A certain level of taxes is necessary, but raising tax rates retards economic growth The government generates zero tax revenue at both the zero percent tax rate and the 100 percent tax rate, as shown in the Laffer curve The Smoot-Hawley Tariff Act raised import tax rates during the Great Depression but led to lower revenue from those tariffs

Check all of the following that are true. Since slavery was ruled unconstitutional via the 13th Amendment in 1865, the funds needed for these reparations would necessarily come from individuals who have never owned slaves themselves and would go to individuals who have never personally been slaves. Affirmative action policies in admissions and hiring criteria - whether racial quotas or racial preferences - treat people differently based on skin color The "soft bigotry of low expectations" occurs when certain groups of people are told, in effect, they cannot succeed without a lowering of standards or a redistribution of wealth because they are victims of past injustices Reparations are financial compensation for descendants of slave owners

Affirmative action policies in admissions and hiring criteria - whether racial quotas or racial preferences - treat people differently based on skin color

Check each of the following that are true. Asians have the lowest illegitimacy rates, that is, children born to unmarried parents In 2008, Barack Obama explained the devastating effects of fatherlessness by noting that "children who grow up without a father are five times more likely to live in poverty and commit crime; nine times more likely to drop out of schools and 20 times more likely to end up in prison." FDR interned Hispanics during WWII, the only time U.S. citizens have ever been interned by their own government Unfortunately, unmarried birth rates skyrocketed for all racial groups in the decades following LBJ's Great Society and War on Poverty Asians have significantly higher educational attainment than other racial groups, while Hispanics have the least. Whites have the highest illegitimacy rates, now surpassing 70 percent, with one-parent households led by single mothers 91 percent of the time.

Asians have the lowest illegitimacy rates, that is, children born to unmarried parents In 2008, Barack Obama explained the devastating effects of fatherlessness by noting that "children who grow up without a father are five times more likely to live in poverty and commit crime; nine times more likely to drop out of schools and 20 times more likely to end up in prison." Unfortunately, unmarried birth rates skyrocketed for all racial groups in the decades following LBJ's Great Society and War on Poverty Asians have significantly higher educational attainment than other racial groups, while Hispanics have the least.

In the Private Sector, there are many choices to be made by Business managers regarding which "projects" to borrow for and which "projects" to invest in. These choices often contain a great deal of ______________________ as well as the potential for benefits (profits). Risk (the possibility of costs being more than originally perceived) Uncertainty (the possibility of benefits being less than originally perceived) Both risk and uncertainty None of these choices are correct

Both risk and uncertainty

Some of the most important income determinants include ___. (check all that apply) age education/skills race/gender motivations, work ethic, quality of work location color shirt they wear most often difficulty of job availability to work "on-call" career field

Education/Skills Career Field Location Motivations, work ethic, quality of work Difficulty of job Availability to work "on-call"

Check each of the following that are true. Asians - along with smaller minority groups like Jews, Mormons, and the Amish - have achieved stunning prosperity in America by getting married and staying married, along with attaining higher education Policies, commonly called affirmative action, encourage the admissions and hiring of ethnic minority groups to "level the playing field" and create more equal outcomes If individuals graduate from high school, have a steady job, avoid having children before marriage, and do not become incarcerated, they have an extremely small chance of living in poverty In addition to these basics, getting married and staying married, along with attaining higher education, are some of the characteristics that lead to prosperity Affirmative action policies tend to give an advantage to white and Asian students and job applicants

If individuals graduate from high school, have a steady job, avoid having children before marriage, and do not become incarcerated, they have an extremely small chance of living in poverty Policies, commonly called affirmative action, encourage the admissions and hiring of ethnic minority groups to "level the playing field" and create more equal outcomes In addition to these basics, getting married and staying married, along with attaining higher education, are some of the characteristics that lead to prosperity Asians - along with smaller minority groups like Jews, Mormons, and the Amish - have achieved stunning prosperity in America by getting married and staying married, along with attaining higher education

The ____ tax rate is the tax rate that applies to the last dollar you earn. average marginal effective optimal

Marginal

A private good is _______ in consumption and _________. Rival; exclusionary Rival; non-exclusionary Non-rival; exclusionary Non-rival; non-exclusionary

Rival; exclusionary

The establishment of a legal system, according to the Preamble to the Constitution, comes first in the sequence because law and order is necessary not only for a prosperous economy but also for a fully functioning society Liberty, which necessarily includes economic freedom that is characteristic of socialism, relates to the ability of citizens to engage in voluntary agreements largely free from government restrictions The Constitution and the founding of the Republic took place at a time when the liberty-minded ideas of John Locke and Adam Smith were popular, and many believe the largely hands-off approach the government took with respect to the economy is what allowed the United States to become the wealthiest nation in the history of the world The general welfare clause is generally agreed upon to relate to the economy, but the government is required to only "promote" the general welfare rather than to "provide" for it as is necessary for national defense

The establishment of a legal system, according to the Preamble to the Constitution, comes first in the sequence because law and order is necessary not only for a prosperous economy but also for a fully functioning society The Constitution and the founding of the Republic took place at a time when the liberty-minded ideas of John Locke and Adam Smith were popular, and many believe the largely hands-off approach the government took with respect to the economy is what allowed the United States to become the wealthiest nation in the history of the world The general welfare clause is generally agreed upon to relate to the economy, but the government is required to only "promote" the general welfare rather than to "provide" for it as is necessary for national defense

Check all of the following that are true. The highest one percent of income earners in the U.S. (who made an annual income of at least $421,000 in 2016) paid more than 37 percent of the all the taxes paid in the country for that year The bottom half (50 percent) of income-earners paid a combined total of just 3 percent of all the taxes paid in 2016 The income tax share paid by the top 10 percent of income earners has decreased from roughly 55 percent in 1986 to just 20 percent in 2016 From 1986 to 2016, the share of income taxes paid by the bottom 90 percent has decreased to 30.5 percent and the share paid by the bottom half of earners has decreased to just 3 percent

The highest one percent of income earners in the U.S. (who made an annual income of at least $421,000 in 2016) paid more than 37 percent of the all the taxes paid in the country for that year The bottom half (50 percent) of income-earners paid a combined total of just 3 percent of all the taxes paid in 2016 From 1986 to 2016, the share of income taxes paid by the bottom 90 percent has decreased to 30.5 percent and the share paid by the bottom half of earners has decreased to just 3 percent

Check all of the following that are true. The national debt as a percentage of GDP is a more accurate way of conceiving of the debt than in absolute (raw dollar) terms Although the national debt has decreased substantially since the last surplus years of 1998 through 2001, the economy has also grown over that period Defense spending was more than 90 percent of federal spending during WWII but has fallen to just around 16 percent in recent years The largest tax most Americans pay is the federal income tax The 4th Amendment allowed the U.S. government to be able to tax incomes for the first time

The national debt as a percentage of GDP is a more accurate way of conceiving of the debt than in absolute (raw dollar) terms Although the national debt has decreased substantially since the last surplus years of 1998 through 2001, the economy has also grown over that period The largest tax most Americans pay is the federal income tax

Check each of the following that are true. Workers with professional degrees earn more than those with doctorate degrees. Married couples earn the most, and single male householders earn more than single female householders. Suburbanites earn more than those in the inner cities, while those in rural areas earn the least. Income increases with age, until after age 55, as more individuals begin to retire. Native born persons earn more than foreign born, but naturalized citizens earn the most. Whites earn the highest income in America Those in the west and northeast earn the least, while southerners earn the most.

Those in the west and northeast earn the least, while southerners earn the most. Married couples earn the most, and single male householders earn more than single female householders. Workers with professional degrees earn more than those with doctorate degrees. Native born persons earn more than foreign born, but naturalized citizens earn the most. (maybe?) Income increases with age, until after age 55, as more individuals begin to retire. (maybe?)

One of the biggest problems with an "equal pay for equal work" law is that it is very tough to determine if two workers are actually doing "equal" work because, although they may have do similar tasks, the quality of their work can be quite different. True False

True

Only women would ever be hired if it were true that sexist businesses could get away with paying women less even though they were equally qualified. True False

True

A(n) _________ tax rate is the amount of taxes divided by the amount of income. marginal proportional average none of these choices are correct

average

Check all of the following that are true. The initial highest federal income tax rate was seven percent but quickly increased to over 70 percent within a few years and maxed out at 94 percent in 1944 during WWII The Tax Cuts and Jobs Act of 2017 signed by President Trump lowered marginal tax rates across the board, increased the standard deduction, lowered the corporate tax rate from 35 percent to 21 percent, and ended the Obamacare mandate tax The federal income began in 1776 Federal income tax rates were reduced during the administrations of Presidents Coolidge, Kennedy, Reagan, George W. Bush, and Trump

the initial highest federal income tax rate was seven percent but quickly increased to over 70 percent within a few years and maxed out at 94 percent in 1944 during WWII The Tax Cuts and Jobs Act of 2017 signed by President Trump lowered marginal tax rates across the board, increased the standard deduction, lowered the corporate tax rate from 35 percent to 21 percent, and ended the Obamacare mandate tax Federal income tax rates were reduced during the administrations of Presidents Coolidge, Kennedy, Reagan, George W. Bush, and Trump

The only way for a less-qualified person to out-compete a person with more skills for a job is ______. to hope that an "Equal Pay" Law goes into effect. none of these choices are correct. to have a higher minimum wage to be passed. to offer to work for less money

to offer to work for less money

Not getting paid "enough" money is not the main problem low-income workers face, but a symptom of their problem - that they are not producing enough products because they lack the requisite skills. True False

true