Question 1

Total taxes paid divided by total income is called the

Accepted Answer

A)  lump-sum tax liability.
B)  marginal tax rate.
C)  average tax rate.
D)  average consumption tax liability.E) A) and D)
F) B) and C)

Question 2

​Karole's income rises from $50,000 to $75,000 and her income tax increases from $8,000 to $9,500.Her average tax rate is 6%.

Accepted Answer

A) True 
 B)False

Question 3

Suppose a country imposes a lump-sum income tax of $6,000 on each individual in the country. What is the average income tax rate for an individual who earns $60,000 during the year?

Accepted Answer

A)  0%
B)  10%
C)  More than 10%
D)  The average tax rate cannot be determined without knowing the entire tax schedule.E) C) and D)
F) None of the above

Question 4

Part of the deadweight loss from taxing labor earnings is that people

Accepted Answer

A)  will work more.
B)  will be reluctant to hire accountants to file their tax returns.
C)  with low tax liabilities will universally be worse off than under some other tax policy.
D)  will work less.E) All of the above
F) None of the above

Question 5

In 2014, what were the two largest sources of federal tax revenues, and what were the two largest expenses of the federal government?

Accepted Answer

In 2014, individual income taxes and soc...

Question 6

If a tax takes a smaller fraction of income as income rises, it is

Accepted Answer

A)  proportional.
B)  regressive.
C)  progressive.
D)  based on the ability-to-pay principle.E) None of the above
F) A) and B)

Question 7

Who pays a corporate income tax?

Accepted Answer

A)  owners of the corporation
B)  customers of the corporation
C)  workers of the corporation
D)  All of the above are correct.E) All of the above
F) None of the above

Question 8

Define the marginal tax rate.

Accepted Answer

The marginal tax rat...

Question 9

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

Accepted Answer

A)  20%
B)  23%
C)  40%
D)  45%E) B) and C)
F) C) and D)

Question 10

Table 12-22 
-Refer to Table 12-22. A regressive tax is illustrated by tax

Accepted Answer

A)  A only.
B)  B or D.
C)  C only.
D)  A or D.E) A) and B)
F) B) and C)

Question 11

Table 12-8
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 12-8. For an individual with $200,000 in taxable income, which tax schedule has the lowest average marginal tax rate?

Accepted Answer

A)  Tax Schedule A
B)  Tax Schedule B
C)  Tax Schedule C
D)  Tax Schedule DE) All of the above
F) B) and D)

Question 12

The income tax requires that taxpayers pay 10percent on the first $40,000 of income and 20 percent on all income over $40,000. Karen paid $6,000 in taxes. What were her marginal and average tax rates?

Accepted Answer

A)  20 percent and 12 percent, respectively
B)  20 percent and 15 percent, respectively
C)  10 percent and 12 percent respectively
D)  10 percent and 15 percent respectivelyE) A) and B)
F) None of the above

Question 13

Table 12-7
The following table shows the marginal tax rates for unmarried individuals for two years. 
-Refer to Table 12-7. For an individual who earned $80,000 of taxable income in 2009, what was the individual's average tax rate in 2009?

Accepted Answer

A)  12.7%
B)  15.0%
C)  16.1%
D)  16.9%E) A) and B)
F) A) and C)

Question 14

A person's marginal tax rate equals

Accepted Answer

A)  her tax obligation divided by her average tax rate.
B)  the increase in taxes she would pay as a percentage of the rise in her income.
C)  her tax obligation divided by her income.
D)  the increase in taxes if her average tax rate were to rise by 1percent.E) A) and B)
F) C) and D)

Question 15

If all taxpayers pay the same percentage of income in taxes, the tax system is proportional.

Accepted Answer

A) True 
 B)False

Question 16

​Rob's income rises from $50,000 to $60,000 and his income tax increases from $6,000 to $7,500.His marginal tax rate is 12.5%.

Accepted Answer

A) True 
 B)False

Question 17

One reason that deadweight losses are so difficult to avoid is that

Accepted Answer

A)  taxes affect the decisions that people make.
B)  income taxes are not paid by everyone.
C)  consumption taxes must be universally applied to all commodities.
D)  the administrative burden is hard to calculate.E) C) and D)
F) A) and D)

Question 18

Briefly describe why taxes create deadweight loss.

Accepted Answer

When the government imposes a ...

Question 19

Suppose that Deon places a $150 value on a new MP-3 player, and Juanita places a $140 value on it. The cost of the MP-3 player is $130. Suppose the government levies a $15 tax on MP-3 players, which raises the price to $145. What is the deadweight loss created by the tax?

Accepted Answer

Before the tax, the total surplus was $3...

Question 20

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) None of the above

Exam 12: The Design of the Tax System

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

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Total taxes paid divided by total income is called the

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A person's marginal tax rate equals

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Table 12-8 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 12-8. For an individual with $200,000 in taxable income, which tax schedule has the lowest average marginal tax rate?

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​Karole's income rises from $50,000 to $75,000 and her income tax increases from $8,000 to $9,500.Her average tax rate is 6%.

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Part of the deadweight loss from taxing labor earnings is that people

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Define the marginal tax rate.

Correct AnswerverifiedThe marginal tax rat...View AnswerShow Answer

​Rob's income rises from $50,000 to $60,000 and his income tax increases from $6,000 to $7,500.His marginal tax rate is 12.5%.

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In 2014, what were the two largest sources of federal tax revenues, and what were the two largest expenses of the federal government?

Correct AnswerverifiedIn 2014, individual income taxes and soc...View AnswerShow Answer

Suppose a country imposes a lump-sum income tax of $6,000 on each individual in the country. What is the average income tax rate for an individual who earns $60,000 during the year?

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Table 12-22 -Refer to Table 12-22. A regressive tax is illustrated by tax

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One reason that deadweight losses are so difficult to avoid is that

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If all taxpayers pay the same percentage of income in taxes, the tax system is proportional.

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If a tax takes a smaller fraction of income as income rises, it is

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

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Suppose that Deon places a $150 value on a new MP-3 player, and Juanita places a $140 value on it. The cost of the MP-3 player is $130. Suppose the government levies a $15 tax on MP-3 players, which raises the price to $145. What is the deadweight loss created by the tax?

Correct AnswerverifiedBefore the tax, the total surplus was $3...View AnswerShow Answer

The income tax requires that taxpayers pay 10percent on the first $40,000 of income and 20 percent on all income over $40,000. Karen paid $6,000 in taxes. What were her marginal and average tax rates?

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Briefly describe why taxes create deadweight loss.

Correct AnswerverifiedWhen the government imposes a ...View AnswerShow Answer

Table 12-7 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-7. For an individual who earned $80,000 of taxable income in 2009, what was the individual's average tax rate in 2009?

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Who pays a corporate income tax?

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Karole's income rises from $50,000 to $75,000 and her income tax increases from $8,000 to $9,500.Her average tax rate is 6%.

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The marginal tax rat...
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Rob's income rises from $50,000 to $60,000 and his income tax increases from $6,000 to $7,500.His marginal tax rate is 12.5%.

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In 2014, individual income taxes and soc...
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Before the tax, the total surplus was $3...
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When the government imposes a ...
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