The largest source of income for the federal government is
a. individual income taxes.
b. corporate taxes.
c. tariffs.
d. "sin" taxes on alcohol and cigarettes.
a
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The national debt is the amount
A) by which government outlays exceed tax revenue in a given year. B) by which government tax revenue exceed outlays in a given year. C) of government outlays summed over time. D) of debt outstanding that arises from past budget deficits. E) of all future entitlement spending.
Psychologists Daniel Kahneman and Amos Tversky conducted the following experiments by asking a sample of people the following questions:
Scenario A: "Imagine that you have decided to see a play and paid the admission price of $10 per ticket. As you enter the theater you discover that you have lost the ticket. The seat was not marked and the ticket cannot be recovered. Would you pay $10 for another ticket?" Scenario B: "Imagine that you have decided to see a play where admission is $10 per ticket. As you enter the theater you discover that you have lost a $10 bill. Would you still pay $10 for a ticket for the play?" As long as additional tickets are available, there's no meaningful difference between losing $10 in cash before buying a ticket, and losing the $10 ticket after buying it. In both cases, you are out $10. Yet, far more subjects (88 percent) in Scenario B say they would pay $10 for another ticket and see the play while in Scenario A, only 46 percent of the subjects say they would be willing to spend another $10 to see the play. Which of the following is the best explanation for the results of the experiment? A) The endowment effect applies in Scenario A since people already own the ticket and therefore it is more valuable but this is not so in Scenario B. B) In Scenario A, people make an immediate connection between the lost ticket and the play and feel poorer by incorrectly assigning a greater value to the value of the ticket whereas in Scenario B, they do not make the connection between the lost $10 bill and the play. C) In Scenario B, people had not anticipated spending an additional $10 so in effect the price of the ticket is $20 and not $10 whereas in Scenario A, the price of the ticket is still $10. D) The net benefit derived from watching the play is lower in Scenario A where the effective cost is $20 compared to the net benefit in Scenario B.
A decline in the exchange rate could have been caused by which of these factors?
A) A decline in domestic output (income) B) An increase in the domestic real interest rate C) A decline in the world demand for domestic goods D) An increase in foreign output (income)
One problem with the effectiveness of Pigovian taxes is:
A. identifying those who are affected by the externality. B. knowing whether to impose it on the consumer or producer. C. knowing what the value of the tax should be. D. none of these are problems.