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| 1 | |
The largest component of federal spending is: |
| | A) | national defense. |
| | B) | health and education. |
| | C) | income security. |
| | D) | interest on the public debt. |
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| 2 | |
Refer to the following:
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The tax represented in the table above is: |
| | A) | regressive. |
| | B) | proportional. |
| | C) | progressive. |
| | D) | optimal. |
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| 3 | |
Considering average state-level spending and revenue: |
| | A) | most spending is for police and fire protection. |
| | B) | most spending is for health care and hospital administration. |
| | C) | the largest source of revenue is taxes on income. |
| | D) | the largest sources of revenue are sales and excise taxes. |
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| 4 | |
Refer to the following, in which solid arrows are real flows and broken arrows are monetary flows.
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Flow 3 might represent: |
| | A) | federal government bond purchases. |
| | B) | wages paid to chemists at the Environmental Protection Agency. |
| | C) | tax refunds from filing federal income taxes. |
| | D) | federal disability payments. |
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| 5 | |
Suppose that product X is taxed at a constant rate of 10%. However, high-income individuals spend a greater proportion of their income on X than low-income individuals. The tax on product X is: |
| | A) | regressive. |
| | B) | proportional. |
| | C) | progressive. |
| | D) | elastic. |
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| 6 | |
Sellers will bear the largest burden of an excise tax if: |
| | A) | both demand and supply are elastic. |
| | B) | both demand and supply are inelastic. |
| | C) | demand is elastic and supply is inelastic. |
| | D) | demand is inelastic and supply is elastic. |
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| 7 | |
Which of the following federal taxes is most progressive? |
| | A) | Corporate income tax |
| | B) | Personal income tax |
| | C) | Social security tax |
| | D) | Medicare tax |
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| 8 | |
By law, the payroll tax is levied equally on workers and their employees, each paying 7.65%. In the aggregate, the supply of labor is essentially perfectly inelastic. Combining these two observations, we can conclude that the true burden of the tax: |
| | A) | is equally shared by employers and workers. |
| | B) | falls mostly on employers. |
| | C) | falls fully on employers. |
| | D) | falls fully on workers. |
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| 9 | |
If your income increases from $40,000 per year to $41,000 per year and your tax increases from $1000 to $1050, the marginal tax rate is: |
| | A) | $50. |
| | B) | 2.5%. |
| | C) | 5%. |
| | D) | 10%. |
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| 10 | |
The demand for gasoline is more elastic in the long run than the short run. All else equal, this implies that over time, an excise tax on gasoline will: |
| | A) | increasingly be passed onto consumers. |
| | B) | increasingly be passed back onto sellers. |
| | C) | have a shrinking efficiency loss. |
| | D) | generate increasing tax revenues. |
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