Economics: Principles and Practices © 2008

Chapter 9: Sources of Government Revenue

Multiple Choice Quiz

1
An example of a tax used to adjust behavior is when ______.
A)Congress enacted a tax on private aircraft and yachts
B)Canada quadrupled the tax on tobacco in the 1980s
C)Food, child care, and medicine are exempted from taxes
D)The Internal Revenue Service sends taxpayers lengthy instructions
2
If a city taxes a utility company, the company can shift the burden of the tax to its employees by _________.
A)raising its rates to consumers
B)offering smaller dividends to shareholders
C)postponing pay raises indefinitely
D)using profits to absorb the tax increases
3
Many people dislike the income tax code because it entails ______.
A)exemptions
B)deductions
C)complex instructions
D)tax withholding rules
4
A sales tax is considered regressive because it imposes ______.
A)the same rate of taxation on everyone, regardless of income
B)a higher rate of taxation on persons with higher incomes
C)a lower rate of taxation on persons with lower incomes
D)a higher rate of taxation on persons with lower incomes
5
A source of revenue for state and local governments, which is not a major source for the federal government, is ______.
A)excise taxes
B)property taxes
C)individual income taxes
D)corporate income taxes
6
Which of these statements about state sales taxes is correct?
A)All states levy sales taxes.
B)Consumers must file sales tax forms and send their checks to the government.
C)Sales taxes are added to the purchase price of a product.
D)Sales taxes are the largest source of revenue for the states.
7
Entrance charges at national parks are an example of _____.
A)supplier fee
B)user fee
C)sales tax
D)excise tax
8
The tax on profits from the sale of an asset held for at least 12 months is called the _____.
A)surcharge
B)alternative minimum tax
C)capital gains tax
D)flat tax
9
A disadvantage of replacing the present tax code with a flat tax is the ______.
A)simplicity it offers taxpayers
B)tax loopholes it would close
C)removal of behavior incentives
D)probable downsizing of the IRS
10
The tax code is likely to be reformed again because ________.
A)the most recent changes greatly simplified the tax code
B)tax increases often follow record tax collections
C)tax laws change when the one party is able to retain control of the Presidency and Congress
D)politicians are not likely to give up their ability to exercise power through the present tax code
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