1) Which of the following explains the distribution of income?
a. a positive externality
b. The person on which the final burden of a tax falls
c. An unintended result of taxation
d. The way that income is allocated to individuals, families, and other groups
2) Why can suppliers of goods can more easily shift the incidence of a tax to the consumer if the demand of the good is inelastic?
a. Because markets that sell inelastic goods have so much competition, that a tax increase would not be noticed.
b. Because the tax would make marginal utility equal marginal benefit.
c. When taxes are levied, companies legally have to increase their prices.
d. Because the consumer needs the good regardless of the new price.
3) Where is the power to issue taxes granted to the federal government?
a. The sixteenth amendment to the constitution
b. The bill or rights
c. The 20th amendment to the constitution
d. The declaration of independence
4) What are intergovernmental revenues generally used to do?
a. Sanitation workers’ benefits
b. To create national parks
c. Educate and provide public welfare
d. Provide public transportation for all state employees
5) One of the noted advantages of a flat tax is
a. all members of congress generally agree with issuing a flat tax
b. The flat tax offers a relatively simple tax process
c. There is a defined and agreed upon tax rate already in place.
d. The flat tax removes behavior incentives that are built into the tax code
6) Which of the following is TRUE regarding the “incidence of a tax”.
a. This is a tax paid by all people to establish social security payments
b. This refers to the individual(s) who take the final burden of the tax
c. This is a loophole designed to help the rich
d. This is a tax on individuals who run oligopolies
7) Person “A” earns $10,000 a year and pays 10% of his income in taxes. Person “B” earns $60,000 a year and pays 20% in taxes. Which kind of tax is being represented?
a. A regressive tax
b. A progressive tax
c. A loophole tax
d. A flat tax