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Exam 20: Public Finance: Expenditures and Taxes

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Question 41

Multiple Choice

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Proprietary income refers to

A) revenue flowing to the government from taxes.
B) money borrowed by the government to finance its operations.
C) revenue generated by government-run businesses.
D) transfer payments from the government to the owners of property resources.

E) B) and D)
F) A) and B)

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Question 42

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The incidence of a tax pertains to

A) the degree to which it alters the distribution of income.
B) how easy it is to evade the tax.
C) who actually bears the burden of a tax.
D) the progressiveness or regressiveness of tax rates.

E) A) and C)
F) B) and D)

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Question 43

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The graph illustrates the market for a product on which an excise tax has been imposed by government. What is the area that represents the portion of the excise tax that is the burden to consumers?

Which of the lines in the diagram represent(s) a progressive tax?

List the arguments for and against state lotteries.

Federal employment in the United States is dominated by what two functions?

The two largest sources of tax revenue for the U.S. federal government are

Assume that in year 1 you pay an average tax rate of 20 percent on a taxable income of $20,000. In year 2, you pay an average tax rate of 25 percent on a taxable income of $30,000. Assuming no change in tax rates, the marginal tax rate on your additional $10,000 of income is

The table gives data for the market for a product. If an excise tax of $3 per unit is imposed on this product, the new equilibrium price with tax will be

The overall tax structure of the United States is proportional or slightly regressive.

The marginal tax rate is

Transfer payments are "exhaustive" in that they directly absorb resources, whereas government purchases are "nonexhaustive."

The probable incidence of the tax on business property is on consumers.

The table represents a personal income tax schedule. If income increases from $15,000 to $30,000, the marginal tax rate is

The largest source of tax revenue for the U.S. federal government is

(Advanced analysis) The equations for the demand and supply curves for a particular product are P = 10 − 0.4 Q and P = 2 + 0.4 Q, where P is price and Q is quantity expressed in units of 100. After an excise tax is imposed on the product, the supply equation is P = 4 + 0.4 Q. The equilibrium quantity before the excise tax is imposed is

Refer to the graph. Assume the market for this product is initially in equilibrium at the intersection of D ₂ and S ₁. The shift in supply from S ₁ to S ₂ is due to an excise tax imposed on the product. The excise tax revenue collected by the government will be

The largest expenditure of the U.S. federal government is for

If a tax is progressive, then

In the diagram, solid arrows reflect real flows, while broken arrows are monetary flows. Flow (4) might represent