chapter 9 econ

Why are there two different views on the effect of taxation on labor supply in the United​ States?

-It depends on normative questions such as how much to tax or how much government intervention is necessary. -The effect of a tax on labor supply depends on the elasticity of labor supply. -The effect of a tax on labor supply depends on the amount of deadweight loss created by the tax.

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

0

example of proportional tax

medicare tax

Which of the following is a problem that black markets pose in an​ economy?

participants use resources to evade the law

To reduce inequality and poverty in an​ economy, the government uses a​

progressive tax system to fund transfer payments.

example of regressive tax

property tax

Which of the following is not a factor that influences government taxation and spending​ decisions?

Correcting​ post-tax income distribution

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

To raise revenues to pay for operations

The largest source of revenue for the federal government is​

individual income taxes.

A tax imposed on sellers will cause the supply curve to shift __________ The more elastic the supply​ curve, the more tax incidence falls on ________

up, consumers

Examples of direct regulation include​

zoning restrictions, price floors, laws restricting alcohol purchases

A black market is​

a nonlegal market for regulated goods and services

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

demand, shortage

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

different from

Example of progressive tax is

income tax

Lump-sum taxes are

regressive

Tax incidence refers to

who bears the burden of a tax.

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

A tax collector who was qualified to produce motherboards

Consumer sovereignty suggests that​

government should not interfere with consumer choices.

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.

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

beuracracies (corruption)

Direct regulation is​

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

A price floor placed below the equilibrium price would __________ the market. If the price floor was set above the equilibrium price it would ______________ the market. A price floor reallocates surplus to _____________

have no effect on the market, create a surplus, producers

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.

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

increased immigration of foreign high earners

The government runs a government surplus when

tax revenue exceed its spending

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.

________________ 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, Wages

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.

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

Miscellaneous taxes and​ fees, such as tolls on roads and public transportation tickets.

Is the deadweight loss of taxation the same for different types of​ taxes?

No, it differs according to how taxes change incentives

Is the entire burden of the tax always borne by those on whom it is​ imposed?

Not​ necessarily, since the burden of the tax depends on price elasticity.

When tax rates​ increase, the deadweight loss of taxation increases by ___________________ This implies​ that, all else being​ equal, it is better to have ________________ rather than _________________

a greater amount, many small tax resources, than one large source

If government tax revenues are ​$6.6 trillion and government spending is ​$7.5 ​trillion, the government is running a

budget deficit

If government tax revenues are ​$5.9 trillion and government spending is ​$5.8 ​trillion, the government is running a

budget surplus

What types of goods are likely to be traded in a black​ market?

drug dealing, prostitution

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

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

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.

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 ​$65 comma 000 would pay ​$9 comma 288.45 in income taxes. In this case the​ individual's average tax rate is _________ their marginal tax rate : For individuals whose income puts them in all but the lowest tax​ bracket, their average tax rate is lower than their marginal rate.

lower

Paternalism is the view that

people do not always know what is best for​ them, and government should encourage them to make the right choices.

Which of the following could influence the relationship between inequality and social surplus and move an economy from Point A to Point B on the​ curve?

raising marginal corporate taxes

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​ high, further increases in inequality_______________ social surplus. The flatter the​ equity-efficiency curve, the _______________ the cost of reducing social inequality in terms of social surplus.

reduce, greater

The primary types of tax systems are

regressive, proportional, progressive

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

repealing the Affordable Health Care Act

A government would want to be on this curve where

there is no correct answer to this​ question, as the answer depends on a​ government's value judgments.