Question 1

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000.What are the tax liability and the marginal tax rate for a person whose income is $50,000?

Accepted Answer

A)   12 percent and 20 percent, respectively
B)   12 percent and $50,000, respectively
C)   $6,000 and 12 percent, respectively
D)   $6,000 and 20 percent, respectivelyE) None of the above
F) All of the above

Question 2

In order to construct a more complete picture of the economic burden of government across income classes,economists usually

Accepted Answer

A)   include tax payments as well as transfer payments received.
B)   focus only on the tax payments of wealthy tax payers.
C)   limit their analysis to taxes based on the ability-to-pay principle.
D)   focus their analysis on issues of tax efficiency.E) B) and D)
F) C) and D)

Question 3

Corporate income taxes are based on the amount of revenue a corporation earns.

Accepted Answer

A) True 
 B)False

Question 4

If government spending exceeds government receipts,the government has a

Accepted Answer

A)   budget surplus. Other things the same, the surplus rises if taxes rise.
B)   budget surplus. Other things the same the surplus rises if taxes fall.
C)   budget deficit. Other things the same, the deficit rises if taxes rise.
D)   budget deficit. Other things the same, the deficit rises if taxes fall.E) A) and B)
F) A) and C)

Question 5

For state and local governments,education accounts for approximately what percentage of spending?

Accepted Answer

A)   25 percent
B)   34 percent
C)   50 percent
D)   75 percentE) None of the above
F) B) and C)

Question 6

The most efficient tax possible is a

Accepted Answer

A)   marginal income tax.
B)   lump-sum tax.
C)   consumption tax.
D)   corporate profit tax.E) A) and D)
F) B) and C)

Question 7

A budget deficit occurs when government receipts fall short of government spending.

Accepted Answer

A) True 
 B)False

Question 8

Table 12-6
 
-Refer to Table 12-6.What is the marginal tax rate for a person who makes $35,000?

Accepted Answer

A)   25%
B)   30%
C)   40%
D)   60%E) A) and B)
F) A) and C)

Question 9

Revenues from social insurance taxes are earmarked to pay for education and welfare.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is not correct?

Accepted Answer

A)   The U.S. tax burden is high compared to many poor countries.
B)   As nations get richer, their governments typically collect a smaller share of income in taxes.
C)   The U.S. has a higher federal tax burden than China and India.
D)   The U.S. tax burden is low compared to many European countries.E) A) and B)
F) A) and C)

Question 11

The concept that people should pay taxes based on the benefits they receive from government services is called

Accepted Answer

A)   the ability-to-pay principle.
B)   the benefits principle.
C)   horizontal equity.
D)   vertical equity.E) A) and C)
F) All of the above

Question 12

The U.S.federal government collects taxes in a number of ways.Rank the following sources of revenue from the largest to the smallest.

Accepted Answer

A)   corporate income taxes, individual income taxes, social insurance taxes
B)   social insurance taxes, individual income taxes, corporate income taxes
C)   individual income taxes, social insurance taxes, corporate income taxes
D)   individual income taxes, corporate income taxes, social insurance taxesE) None of the above
F) All of the above

Question 13

Table 12-11
The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown.
 
-Refer to Table 12-11.Which tax schedules are regressive?

Accepted Answer

A)   Tax Schedule A and Tax Schedule B
B)   Tax Schedule B and Tax Schedule C
C)   Tax Schedule C and Tax Schedule D
D)   None of the Tax Schedules are regressive.E) A) and D)
F) B) and D)

Question 14

The federal healthcare spending program that specifically targets the poor is called

Accepted Answer

A)   Medicaid.
B)   Medicare.
C)   National Institutes of Health.
D)   Blue Cross/Blue Shield.E) A) and D)
F) C) and D)

Question 15

Scenario 12-1
Skip places a $20 value on a bottle of wine, and Walt places a $17 value on it. The equilibrium price for a bottle of wine is $15.
-Refer to Scenario 12-1.How much total consumer surplus do Skip and Walt get when each purchases one bottle of wine?

Accepted Answer

A)   $1
B)   $2
C)   $5
D)   $7E) A) and C)
F) All of the above

Question 16

Scenario 12-2
Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $8 for it. Roger would be willing to pay $11 for his first slice, $9 for his second slice, and $5 for his third slice. The current market price is $5 per slice.
-Refer to Scenario 12-2.Assume that the government places a $2 tax on each slice of cheesecake and that the new equilibrium price is $7.What is the deadweight loss of the tax?

Accepted Answer

A)   zero
B)   $3
C)   $6
D)   $8E) B) and C)
F) All of the above

Question 17

Scenario 12-1
Skip places a $20 value on a bottle of wine, and Walt places a $17 value on it. The equilibrium price for a bottle of wine is $15.
-Refer to Scenario 12-1.Suppose the government levies a tax of $1 on each bottle of wine,and the equilibrium price of a bottle of wine increases to $16.How much tax revenue is collected?

Accepted Answer

A)   $0
B)   $1
C)   $2
D)   $4E) C) and D)
F) B) and C)

Question 18

Table 12-10
The following table shows the marginal tax rates for unmarried individuals for two years.
 
-Refer to Table 12-10.For an individual who earned $35,000 in taxable income in both years,which of the following describes the change in the individual's average tax rate between the two years?

Accepted Answer

A)   The average tax rate increased from 2009 to 2010.
B)   The average tax rate decreased from 2009 to 2010.
C)   The average tax rate remained constant from 2009 to 2010.
D)   The change in the average tax rate cannot be determined for the two tax schedules shown.E) All of the above
F) A) and B)

Question 19

When the marginal tax rate equals the average tax rate,the tax is

Accepted Answer

A)   proportional.
B)   progressive.
C)   regressive.
D)   egalitarian.E) A) and B)
F) None of the above

Question 20

The average tax rate measures the

Accepted Answer

A)   fraction of spending paid in taxes.
B)   fraction of income paid in taxes.
C)   incremental rate of tax on income.
D)   average deadweight loss from all taxes.E) B) and D)
F) All of the above

Exam 12: The Design of the Tax System.

The most efficient tax possible is a

Correct Answer
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The concept that people should pay taxes based on the benefits they receive from government services is called

Correct Answer
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Scenario 12-1 Skip places a $20 value on a bottle of wine, and Walt places a $17 value on it. The equilibrium price for a bottle of wine is $15. -Refer to Scenario 12-1.How much total consumer surplus do Skip and Walt get when each purchases one bottle of wine?

Correct Answer
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A budget deficit occurs when government receipts fall short of government spending.

Correct Answer
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Table 12-10 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-10.For an individual who earned $35,000 in taxable income in both years,which of the following describes the change in the individual's average tax rate between the two years?

Correct Answer
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Corporate income taxes are based on the amount of revenue a corporation earns.

Correct Answer
verified

If government spending exceeds government receipts,the government has a

Correct Answer
verified

When the marginal tax rate equals the average tax rate,the tax is

Correct Answer
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Table 12-11 The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. -Refer to Table 12-11.Which tax schedules are regressive?

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000.What are the tax liability and the marginal tax rate for a person whose income is $50,000?

Correct Answer
verified

In order to construct a more complete picture of the economic burden of government across income classes,economists usually

Correct Answer
verified

The federal healthcare spending program that specifically targets the poor is called

Correct Answer
verified

Correct Answer
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Correct Answer
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Revenues from social insurance taxes are earmarked to pay for education and welfare.

Correct Answer
verified

For state and local governments,education accounts for approximately what percentage of spending?

Correct Answer
verified

The average tax rate measures the

Correct Answer
verified

The U.S.federal government collects taxes in a number of ways.Rank the following sources of revenue from the largest to the smallest.

Correct Answer
verified

Table 12-6 -Refer to Table 12-6.What is the marginal tax rate for a person who makes $35,000?

Correct Answer
verified

Exam 12: The Design of the Tax System.

The most efficient tax possible is a

Correct AnswerverifiedShow Answer

The concept that people should pay taxes based on the benefits they receive from government services is called

Correct AnswerverifiedShow Answer

Scenario 12-1 Skip places a $20 value on a bottle of wine, and Walt places a $17 value on it. The equilibrium price for a bottle of wine is $15. -Refer to Scenario 12-1.How much total consumer surplus do Skip and Walt get when each purchases one bottle of wine?

Correct AnswerverifiedShow Answer

A budget deficit occurs when government receipts fall short of government spending.

Correct AnswerverifiedShow Answer

Table 12-10 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-10.For an individual who earned $35,000 in taxable income in both years,which of the following describes the change in the individual's average tax rate between the two years?

Correct AnswerverifiedShow Answer

Corporate income taxes are based on the amount of revenue a corporation earns.

Correct AnswerverifiedShow Answer

If government spending exceeds government receipts,the government has a

Correct AnswerverifiedShow Answer

When the marginal tax rate equals the average tax rate,the tax is

Correct AnswerverifiedShow Answer

Table 12-11 The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. -Refer to Table 12-11.Which tax schedules are regressive?

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000.What are the tax liability and the marginal tax rate for a person whose income is $50,000?

Correct AnswerverifiedShow Answer

In order to construct a more complete picture of the economic burden of government across income classes,economists usually

Correct AnswerverifiedShow Answer

The federal healthcare spending program that specifically targets the poor is called

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Revenues from social insurance taxes are earmarked to pay for education and welfare.

Correct AnswerverifiedShow Answer

For state and local governments,education accounts for approximately what percentage of spending?

Correct AnswerverifiedShow Answer

The average tax rate measures the

Correct AnswerverifiedShow Answer

The U.S.federal government collects taxes in a number of ways.Rank the following sources of revenue from the largest to the smallest.

Correct AnswerverifiedShow Answer

Table 12-6 -Refer to Table 12-6.What is the marginal tax rate for a person who makes $35,000?

Correct AnswerverifiedShow Answer

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