Deck 22: Public Finance in a Federal System

Question 1

The Tiebout model assumes that public services are financed by a proportional property tax.

A) True
B) False
C) Uncertain

Answer 1

True

Question 2

It is easier to avoid state and local taxes than federal taxes.

A) True
B) False
C) Uncertain

Answer 2

True

Question 3

A local government would not be efficient in providing which of the following services?

A) International aid
B) Police protection
C) Fire protection
D) Roads

Answer 3

International aid

Question 4

When a group of people voluntarily band together to share some kind of benefit,we call this

A) a gang.
B) a team.
C) a coalition.
D) a club.

Question 5

A circuit breaker is concerned with

A) faulty tax wiring.
B) residential property taxes.
C) corporate tax systems.
D) block grants.

Question 6

The property tax is very popular because

A) it is fairly assigned.
B) it is administered locally.
C) it is very regressive.
D) all of these answer options are correct.
E) none of these answer options are correct.

Question 7

Property taxes are currently unpopular.In the future,they will be more popular.

A) True
B) False
C) Uncertain

Question 8

Disadvantages of decentralization are

A) intercommunity externalities.
B) forgone scale economies in the provision of public goods.
C) inefficient taxation.
D) the lack of ability to redistribute income.
E) all of these answer options are correct.

Question 9

A local public good

A) only benefits members of a particular community.
B) gives higher benefits than regular public goods.
C) requires unanimous voting.
D) has become an integral part of the federal government.

Question 10

When the federal government gives a grant to a state or local government without restrictions on use,this is known as

A) revenue sharing.
B) block grants.
C) endowments.
D) tax shelter.

Question 11

A Tiebout model involves

A) completely mobile individuals.
B) governments generating no externalities.
C) perfect information.
D) all of these answer options are correct.

Question 12

When a tax is based on the difference between the market value of the taxpayer's assets and liabilities,it is called

A) a difference tax.
B) a wedge tax.
C) a personal net worth tax.
D) an implied liability tax.

Question 13

When did the percentage of federal grants in state and local expenditures reach its peak?

A) 1960s
B) 1970s
C) 1980s
D) 1990s

Question 14

The assessed value of a home is

A) the value that the jurisdiction uses to assign taxes.
B) an annual 6% increase in the value of a home.
C) the annual rate of deprecation of a home because of use.
D) always lower than its market value.

Question 15

Which of the following is not a political jurisdiction?

A) Cook County
B) Alabama
C) New York City
D) California research triangle

Question 16

__________ explores the roles of different level of government and the ways in which they relate to each other.

A) Federal system
B) Club model
C) Centralization
D) Fiscal federalism

Question 17

Local property taxes are used to provide

A) education.
B) fire protection.
C) libraries.
D) all of these answer options are correct.

Question 18

For the last 100 years,the level of government that has seen the largest increase in its percentage of expenditures is

A) local.
B) state.
C) federal.
D) all of these answer options are correct.

Question 19

The flypaper effect causes money to move from where it initially hits and sticks somewhere down the bureaucratic chain.

A) True
B) False
C) Uncertain

Question 20

_________ percent of Americans have different residences than they did the year before.

A) 30
B) 15
C) 9
D) 22

Question 21

A federal system consists of one level of government to provide public goods and services.

A) True
B) False
C) Uncertain

Question 22

The Tiebout model can be summarized as "voting with the invisible hand."

A) True
B) False
C) Uncertain

Question 23

Lump sum grants are sometimes referred to as categorical grants.

A) True
B) False
C) Uncertain

Question 24

In Tiebout Model,the tax can vary across communities.

A) True
B) False
C) Uncertain

Question 25

Grants as a percent of total federal outlays have been increasing since the 1960s.

A) True
B) False
C) Uncertain

Question 26

The proportion of total direct expenditure made by local governments is called the centralization ratio.

A) True
B) False
C) Uncertain

Question 27

Some cities have a relatively high residential property tax,while others have a low residential property tax.Give an explanation for this.

Question 28

Local property tax policy generally has a small effect on the property tax base.

A) True
B) False
C) Uncertain

Question 29

The Tiebout model offers a quasi-market solution to public good production and community development.What are some drawbacks to this model?

Question 30

Property taxes are not very popular.People might dislike other taxes just as much,but feel powerless to change them.If the assessed value of the property does not rise or,in fact,declines,then this should be followed by decreases in tax rates.This,however,is not welcomed by property owners,either.Why?