Question 1

The notion that similar taxpayers should pay similar amounts of taxes is known as

Accepted Answer

A)   vertical equity.
B)   the benefits principle.
C)   horizontal equity.
D)   taxpayer efficiency.E) A) and B)
F) None of the above

Question 2

Which type of tax is used to finance the Social Security program in the United States?

Accepted Answer

A)   consumption tax
B)   income tax
C)   payroll tax
D)   property taxE) B) and C)
F) A) and D)

Question 3

As tax laws become more complex,

Accepted Answer

A)   the administrative burden of taxes will increase.
B)   compliance costs are likely to decrease.
C)   the government will collect more in tax revenue.
D)   the amount of tax revenue lost to tax evasion will decrease.E) A) and B)
F) A) and C)

Question 4

From the time of Benjamin Franklin to the present,the percentage of the average American's income that goes to pay taxes

Accepted Answer

A)   has decreased from about 20 percent to about 10 percent.
B)   has remained constant at about 10 percent.
C)   has risen from less than 2 percent to about 44.4 percent.
D)   has risen from less than 5 percent to about 33.3 percent.E) B) and C)
F) A) and B)

Question 5

Economists play an important role in the complex debates over tax policy by

Accepted Answer

A)   identifying efficiency as the most important goal of tax policy.
B)   identifying equity as the most important goal of tax policy.
C)   shedding light on the tradeoff between efficiency and equity in tax policy.
D)   None of the above is correct.E) B) and C)
F) All of the above

Question 6

Which of the following types of taxes achieves vertical equity: a proportional tax,regressive tax,and/or progressive tax?

Accepted Answer

proportion...

Question 7

In the United States,the payroll tax is also called a

Accepted Answer

A)   dividend income tax.
B)   social insurance tax.
C)   value added tax.
D)   capital gains tax.E) A) and D)
F) C) and D)

Question 8

You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) two people with the same total income would pay taxes of the same amount,and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person.Which of the following tax systems could achieve both goals?

Accepted Answer

A)   a lump-sum tax
B)   a regressive tax
C)   a progressive tax
D)   a proportional taxE) C) and D)
F) A) and B)

Question 9

A tax system with little deadweight loss and a small administrative burden would be described as

Accepted Answer

A)   equitable.
B)   communistic.
C)   capitalistic.
D)   efficient.E) None of the above
F) A) and B)

Question 10

One tax system is less efficient than another if it

Accepted Answer

A)   places a lower tax burden on lower-income families than on higher-income families.
B)   places a higher tax burden on lower-income families than on higher-income families.
C)   raises the same amount of revenue at a higher cost to taxpayers.
D)   raises less revenue at a lower cost to taxpayers.E) A) and B)
F) A) and C)

Question 11

Like spending on Social Security,the share of federal government spending on Medicare has risen substantially over time.This is most likely a result of

Accepted Answer

A)   a rising population of poor in the economy.
B)   the elderly population growing more rapidly than the overall population.
C)   an immigration policy that promotes an influx of migrant farm workers.
D)   All of the above are important factors.E) B) and C)
F) B) and D)

Question 12

Table 12-5
 
-Refer to Table 12-5.What is the average tax rate for a person who makes $60,000?

Accepted Answer

A)   20%
B)   30%
C)   40%
D)   50%E) A) and B)
F) A) and C)

Question 13

Which of the following tax systems could not be structured to satisfy conditions of vertical equity?

Accepted Answer

A)   a proportional tax
B)   a regressive tax
C)   a progressive tax
D)   a lump-sum taxE) All of the above
F) B) and C)

Question 14

When the total surplus lost as a result of a tax is less than the amount of tax revenue collected by the government there is a deadweight loss.

Accepted Answer

A) True 
 B)False

Question 15

Table 12-13
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.
 
-Refer to Table 12-13.Which of the three tax systems is progressive?

Accepted Answer

A)   Tax System A
B)   Tax System B
C)   Tax System C
D)   All of the tax systems are progressive.E) A) and B)
F) A) and C)

Question 16

Suppose the government levies a "fat tax" on naturally-sweetened carbonated beverages to try to reduce the number of overweight children.If the tax revenues pay for the health problems of overweight children,the tax would satisfy the

Accepted Answer

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

Question 17

The U.S.federal government finances budget deficits by

Accepted Answer

A)   selling stock,much like a corporation.
B)   printing additional currency.
C)   borrowing from the public.
D)   raising property taxes.E) B) and D)
F) B) and C)

Question 18

Suppose that in 2020 the average citizen's federal tax bill is $12,466,and total federal spending is $10,824 per person.In 2020,the federal government will have

Accepted Answer

A)   a budget surplus.
B)   a budget deficit.
C)   horizontal equity.
D)   vertical equity.E) B) and C)
F) A) and D)

Question 19

The two taxes that together provide the U.S.federal government with approximately 85 percent of its revenue are

Accepted Answer

A)   individual income taxes and property taxes.
B)   individual income taxes and corporate income taxes.
C)   individual income taxes and payroll taxes.
D)   sales taxes and payroll taxes.E) None of the above
F) All of the above

Question 20

Pat calculates that for every extra dollar she earns,she owes the government 40 cents.Her total income now is $44,000,on which she pays taxes of $11,000.Determine her average tax rate and her marginal tax rate.

Accepted Answer

A)   Her average tax rate is 40 percent and her marginal tax rate is 25 percent.
B)   Her average tax rate is 40 percent and her marginal tax rate is 40 percent.
C)   Her average tax rate is 25 percent and her marginal tax rate is 25 percent.
D)   Her average tax rate is 25 percent and her marginal tax rate is 40 percent.E) A) and B)
F) A) and C)

Exam 12: The Design of the Tax System

One tax system is less efficient than another if it

Correct Answer
verified

In the United States,the payroll tax is also called a

Correct Answer
verified

Suppose the government levies a "fat tax" on naturally-sweetened carbonated beverages to try to reduce the number of overweight children.If the tax revenues pay for the health problems of overweight children,the tax would satisfy the

Correct Answer
verified

Which of the following types of taxes achieves vertical equity: a proportional tax,regressive tax,and/or progressive tax?

Correct Answer
verified
proportion...
View Answer

Like spending on Social Security,the share of federal government spending on Medicare has risen substantially over time.This is most likely a result of

Correct Answer
verified

As tax laws become more complex,

Correct Answer
verified

Which of the following tax systems could not be structured to satisfy conditions of vertical equity?

Correct Answer
verified

From the time of Benjamin Franklin to the present,the percentage of the average American's income that goes to pay taxes

Correct Answer
verified

Table 12-5 -Refer to Table 12-5.What is the average tax rate for a person who makes $60,000?

Correct Answer
verified

Suppose that in 2020 the average citizen's federal tax bill is $12,466,and total federal spending is $10,824 per person.In 2020,the federal government will have

Correct Answer
verified

Economists play an important role in the complex debates over tax policy by

Correct Answer
verified

The U.S.federal government finances budget deficits by

Correct Answer
verified

Pat calculates that for every extra dollar she earns,she owes the government 40 cents.Her total income now is $44,000,on which she pays taxes of $11,000.Determine her average tax rate and her marginal tax rate.

Correct Answer
verified

When the total surplus lost as a result of a tax is less than the amount of tax revenue collected by the government there is a deadweight loss.

Correct Answer
verified

The two taxes that together provide the U.S.federal government with approximately 85 percent of its revenue are

Correct Answer
verified

Which type of tax is used to finance the Social Security program in the United States?

Correct Answer
verified

The notion that similar taxpayers should pay similar amounts of taxes is known as

Correct Answer
verified

Correct Answer
verified

Table 12-13 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-13.Which of the three tax systems is progressive?

Correct Answer
verified

A tax system with little deadweight loss and a small administrative burden would be described as

Correct Answer
verified

Exam 12: The Design of the Tax System

One tax system is less efficient than another if it

Correct AnswerverifiedShow Answer

In the United States,the payroll tax is also called a

Correct AnswerverifiedShow Answer

Suppose the government levies a "fat tax" on naturally-sweetened carbonated beverages to try to reduce the number of overweight children.If the tax revenues pay for the health problems of overweight children,the tax would satisfy the

Correct AnswerverifiedShow Answer

Which of the following types of taxes achieves vertical equity: a proportional tax,regressive tax,and/or progressive tax?

Correct Answerverifiedproportion...View AnswerShow Answer

Like spending on Social Security,the share of federal government spending on Medicare has risen substantially over time.This is most likely a result of

Correct AnswerverifiedShow Answer

As tax laws become more complex,

Correct AnswerverifiedShow Answer

Which of the following tax systems could not be structured to satisfy conditions of vertical equity?

Correct AnswerverifiedShow Answer

From the time of Benjamin Franklin to the present,the percentage of the average American's income that goes to pay taxes

Correct AnswerverifiedShow Answer

Table 12-5 -Refer to Table 12-5.What is the average tax rate for a person who makes $60,000?

Correct AnswerverifiedShow Answer

Suppose that in 2020 the average citizen's federal tax bill is $12,466,and total federal spending is $10,824 per person.In 2020,the federal government will have

Correct AnswerverifiedShow Answer

Economists play an important role in the complex debates over tax policy by

Correct AnswerverifiedShow Answer

The U.S.federal government finances budget deficits by

Correct AnswerverifiedShow Answer

Pat calculates that for every extra dollar she earns,she owes the government 40 cents.Her total income now is $44,000,on which she pays taxes of $11,000.Determine her average tax rate and her marginal tax rate.

Correct AnswerverifiedShow Answer

When the total surplus lost as a result of a tax is less than the amount of tax revenue collected by the government there is a deadweight loss.

Correct AnswerverifiedShow Answer

The two taxes that together provide the U.S.federal government with approximately 85 percent of its revenue are

Correct AnswerverifiedShow Answer

Which type of tax is used to finance the Social Security program in the United States?

Correct AnswerverifiedShow Answer

The notion that similar taxpayers should pay similar amounts of taxes is known as

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-13 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-13.Which of the three tax systems is progressive?

Correct AnswerverifiedShow Answer

A tax system with little deadweight loss and a small administrative burden would be described as

Correct AnswerverifiedShow Answer

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Correct Answer
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verified
proportion...
View Answer

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