Pre-Test Chapter 4 ed17-1

Pre-Test Chapter 4 ed17-1 - Pre-Test Chapter 4 ed17 1....

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Prof Keep Econ Pre-Test Chap 4 ed17 Page 1 of 7 Pre-Test Chapter 4 ed17 1. Refer to the above diagram, in which solid arrows reflect real flows; broken arrows are monetary flows. Flow (8) might represent: A. personal income taxes. B. automobile purchases by the state of Maine. C. the services of firefighters. D. subsidies to farmers. 2. Government transfer payments: A. have been virtually eliminated by Federal revenue sharing. B. have virtually no effect on the distribution of income. C. make the distribution of income less equal. D. make the distribution of income less unequal. The following data represent a personal income tax schedule. Answer the next question(s) on the basis of this information.
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Prof Keep Econ Pre-Test Chap 4 ed17 Page 2 of 7 3. Refer to the above table. If your taxable income is $8,000, your average tax rate is: A. 25 percent and the marginal rate on additional income is also 25 percent. B. 25 percent and the marginal rate on additional income is 50 percent. C. 25 percent and the marginal rate on additional income cannot be determined from the information given. D. 20 percent and the marginal rate on additional income is 30 percent. 4. For a progressive tax the: A. average tax rate exceeds the marginal tax rate as income rises. B. marginal tax rate declines as income increases. C. average and marginal tax rates are equal. D. marginal tax rate exceeds the average tax rate as income rises. 5. Nonexcludability is the idea that: A. government actions cannot remedy market failure. B. the presence of external costs and benefits produces a misallocation of resources. C. individuals cannot receive benefits from a good without paying for it. D. individuals who are unable or unwilling to pay for a good cannot be excluded from the benefits provided by that product. 6. Externalities: A. relate to costs only. B. relate to benefits only. C. relate to both costs and benefits. D. have been legislated out of existence. 7. Listed in descending order of total numbers, the business population is comprised of: A. sole proprietorships, corporations, and partnerships. B. sole proprietorships, partnerships, and corporations.
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Pre-Test Chapter 4 ed17-1 - Pre-Test Chapter 4 ed17 1....

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