The Public Finance: Trivia Quiz

19 Questions | Total Attempts: 1348

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The Public Finance: Trivia Quiz

The public finance: trivia quiz. Businesses are all controlled by the government to a given level and sometimes the government intervenes in the economy. In the quiz below you will get to test out what you know about different types of taxes and regulations implemented by governments when it comes to business regulation and why they have been put in place. Give it a try and see what more you will learn from it.


Questions and Answers
  • 1. 
    If the marginal tax rate on individual incomes falls, we would expect, other things constant, individuals to
    • A. 

      Offer more hours of work and consume fewer hours of leisure

    • B. 

      Offer fewer hours or work and consume more hours of leisure

    • C. 

      Ultimately pay less in sales taxes

    • D. 

      Experience an overall increase in worker productivity

    • E. 

      All of (a)-(d)

  • 2. 
    Economists identify a tax structure as being progressive if
    • A. 

      The average tax rate increases as the level of taxable income increases

    • B. 

      The marginal tax rate falls as taxable income rises

    • C. 

      The average tax rate remains constant as the level of taxable income rises

    • D. 

      The marginal tax rate remains constant as the level of taxable income rises

    • E. 

      All of (a)-(d)

  • 3. 
    According to the Laffer curve, as tax rates increase, tax revenues
    • A. 

      Rise continuously

    • B. 

      Decrease continuously

    • C. 

      Initially decrease and then increase

    • D. 

      Initially increase and then decrease

    • E. 

      All of (a)-(d)

  • 4. 
    The negative effect on the economy that occurs when average tax rates increase because taxpayers have moved into higher income brackets during an expansion is
    • A. 

      Fiscal drag

    • B. 

      Bracket creep

    • C. 

      The Laffer curve

    • D. 

      Debt burden

    • E. 

      All of (a)-(d)

  • 5. 
    A progressive income tax means that those with a higher income pay
    • A. 

      A lower percentage of their income in taxes than low-income people

    • B. 

      A higher percentage of their income in taxes than low-income people

    • C. 

      The same percentage of their income in taxes as low-income people

    • D. 

      All the taxes in the economy

    • E. 

      All of (a)-(d)

  • 6. 
    The total amount of tax you pay divided by your total income is the
    • A. 

      Marginal tax rate

    • B. 

      Average tax rate

    • C. 

      Total tax rate

    • D. 

      Proportional tax rate

    • E. 

      All of (a)-(d)

  • 7. 
    Tax shifting
    • A. 

      Is the way in which a tax is structured

    • B. 

      Is the ultimate distribution of a tax's burden

    • C. 

      Occurs when taxes cause prices to increase, but wages to fall

    • D. 

      Occurs when households can alter their behaviour and do something to avoid paying a tax.

    • E. 

      All of (a)-(d)

  • 8. 
    VAT (Value added tax) is a good example of which kind of tax
    • A. 

      Ad valorem

    • B. 

      Direct

    • C. 

      Excise duty

    • D. 

      Specific

    • E. 

      All of (a)-(d)

  • 9. 
    Where a tax can be shifted the incidence depends on
    • A. 

      Elasticities of demand and supply

    • B. 

      How many producers there are

    • C. 

      Who is legally obliged to pay the tax

    • D. 

      Whether there is perfect or imperfect information

    • E. 

      All of (a)-(d)

  • 10. 
    Tax incidence is the
    • A. 

      Behaviour of shifting the tax to another party

    • B. 

      Ultimate distribution of a tax's burden

    • C. 

      Structure of the tax

    • D. 

      Measure of the impact the tax has on employment and output.

    • E. 

      All of (a)-(d)

  • 11. 
    Consider replacing the current US tax system with a proportional tax in which everyone would pay a constant fraction of their wages, and there would be no other taxes. Compared to the current personal tax system
    • A. 

      The proportional tax would increase the amount of personal saving

    • B. 

      The proportional tax would make the tax system less progressive than it is now

    • C. 

      The proportional tax would increase the number of hours people work

    • D. 

      All of (a)-(c)

    • E. 

      None of (a)-(c)

  • 12. 
    Economic theory can justify which of the following claims about the effect of an increase in wage taxes:
    • A. 

      It will increase equilibrium labor supply

    • B. 

      It will decrease equilibrium labor supply

    • C. 

      The effect will differ for households with different preferences

    • D. 

      All of (a)-(c)

    • E. 

      None of (a)-(c)

  • 13. 
    The incidence of a tax depends on
    • A. 

      The elasticity of demand in the market

    • B. 

      The market structure (competition, monopoply)

    • C. 

      The production function for the good

    • D. 

      All of (a)-(c)

    • E. 

      None of (a)-(c)

  • 14. 
    Suppose someone discovers a set of 50 Picasso prints in their attic, and before the prints can be sold Congress passes a law that says that the buyer of all Picasso artworks must pay the government $10,000 for every artwork they buy. The person who found the prints hates art and so auctions them off anyway. According to the theory of tax incidence, which of the following is true?
    • A. 

      The statutory incidence of the Picasso tax is on the buyer

    • B. 

      Economic incidence of the Picasso tax is on the seller

    • C. 

      The pretax purchase price of the artworks goes down by exactly $10,000

    • D. 

      All of (a)-(c)

    • E. 

      None of (a)-(c)

  • 15. 
    The knowledge that a Hopkins student won a Rhodes scholarship this year is a public good.
    • A. 

      True

    • B. 

      False

  • 16. 
    Postwar economic history suggests that if the right institutions and government policies can be implemented in Iraq, it can become a prosperous country.
    • A. 

      True

    • B. 

      False

  • 17. 
    The economic theory of insurance says that insurance is most valuable when it is used frequently. Thus, an insurance plan should focus on covering the risks that are most likely to happen.
    • A. 

      True

    • B. 

      False

  • 18. 
    According to the play “A Man for All Seasons,” the Catholic saint Sir Thomas More believed that the purpose of human laws was to accomplish the will of God, and so it was OK sometimes to violate a human law in order to prevent something evil from happening.
    • A. 

      True

    • B. 

      False

  • 19. 
    A utilitarian analysis would say that the fact that income inequality is greater in the United States than elsewhere means that overall social utility per person is lower in the US than in other countries.
    • A. 

      True

    • B. 

      False

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