#1
What is economic surplus?
The difference between total revenue and total cost
ExplanationMeasure of economic efficiency.
#2
Which of the following is an example of a direct tax?
Income tax
ExplanationTax directly imposed on individuals or entities.
#3
What is the Laffer curve used to illustrate?
The relationship between tax rates and government revenue
ExplanationIllustrates the trade-off between tax rates and tax revenue.
#4
In economics, what does the term 'deadweight loss' refer to?
The loss of consumer surplus due to taxation
ExplanationLoss of economic efficiency due to market distortion.
#5
Which tax system charges the same percentage of income from all taxpayers, regardless of their income level?
Flat tax
ExplanationUniform tax rate for all income levels.
#6
What is the 'double taxation' phenomenon in the context of taxation?
Taxing the same income at both the corporate and individual levels
ExplanationTaxation of income at multiple levels.
#7
What is the concept of 'tax incidence' in economics?
The burden of taxation on different groups in society
ExplanationDistribution of tax burden among participants.
#8
In the context of externalities, what does a 'Pigovian tax' aim to address?
Discouraging consumption of certain goods with negative externalities
ExplanationTax to internalize negative externalities.
#9
What is the difference between a tax deduction and a tax credit?
Deductions reduce taxable income, while credits directly reduce the tax liability
ExplanationImpact on taxable income vs. tax owed.
#10
What is the 'flypaper effect' in public finance?
The tendency of government expenditures to stick where they are first applied
ExplanationSticky nature of government spending.