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Student: ___________________________________________________________________________
1. A tax meets the standard of sufficiency if it is easy for people to pay the tax.
True False
2. The federal government is not required to pay interest on the national debt.
True False
3. A static forecast of the revenue effect of a tax rate change assumes that the tax base does not
change.
True False
4. A dynamic forecast of the revenue effect of a tax rate change assumes that the tax base does not
change.
True False
5. The federal Social Security tax burden on employees has not increased since 1990 because the
True False
percent.
True False
7. The city of Berne recently enacted a 10% tax on the price of a subway ticket. Consequently, Mrs.
Lane now walks to work instead of taking the subway. Her behavior illustrates the substitution
True False
8. Jurisdiction P recently increased its income tax rate. A taxpayer who reacts to the increase by
working harder to earn more income is demonstrating the income effect of the rate increase.
True False
9. According to supply-side economic theory, a decrease in tax rates for high-income individuals
True False
10. Supply-side economic theory holds that people who benefit from a tax rate reduction will spend
True False
11. State use taxes are more convenient for individual consumers than state sales taxes.
True False
12. The Internal Revenue Service's cost of collecting $100 of tax revenue is about $3.
True False
13. A convenient tax has low compliance costs for taxpayers and low collection and enforcement
True False
14. According to the classical concept of efficiency, an efficient tax should be neutral in its effect on
True False
15. According to the Keynesian concept of efficiency, an efficient tax should be neutral in its effect on
True False
16. A tax meets the standard of efficiency if it generates enough revenue to pay for the public goods
True False
17. A provision in the tax law designed to encourage a specific economic behavior is a tax
preference.
True False
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