Question 1

Table 12-3
 
-Refer to Table 12-3.Assume that the price of a weekend ski pass is $38 and that the price reflects the actual unit cost of providing a weekend of skiing.What is the value of the surplus that accrues to all four skiers from their weekend trip?

Accepted Answer

A)   $105
B)   $113
C)   $140
D)   $265E) None of the above
F) A) and C)

Question 2

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) B) and C)
F) A) and B)

Question 3

Poor countries such as India and Pakistan usually have low tax burdens.

Accepted Answer

A) True 
 B)False

Question 4

Table 12-12
United States Income Tax Rates for a Single Individual,2002 and 2003.
 
-Refer to Table 12-12.Charles is a single person whose taxable income is $35,000 a year.What happened to his marginal tax rate between 2002 and 2003?

Accepted Answer

A)   It increased.
B)   It decreased.
C)   It did not change.
D)   We do not have enough information to answer this question.E) A) and D)
F) A) and C)

Question 5

Table 12-12
United States Income Tax Rates for a Single Individual,2002 and 2003.
 
-Refer to Table 12-12.Samantha is a single person whose taxable income is $100,000 a year.What is her average tax rate in 2003?

Accepted Answer

A)   24.2%
B)   26.4%
C)   27.8%
D)   30%E) None of the above
F) A) and D)

Question 6

A family's income tax liability is

Accepted Answer

A)   a standard percentage of all income earned.
B)   determined by wage income rather than dividend and interest income.
C)   based on total income.
D)   constant from year to year.E) A) and B)
F) A) and C)

Question 7

In 2007,social insurance taxes represented approximately what percentage of total receipts for the federal government?

Accepted Answer

A)   15%
B)   25%
C)   35%
D)   45%E) B) and C)
F) A) and B)

Question 8

Table 12-2
Consider the tax rates shown in the table below.
 
-Refer to Table 12-2.If Max has taxable income of $227,000,his average tax rate is

Accepted Answer

A)   15.7%.
B)   26.8%.
C)   27.8%.
D)   28.6%.E) B) and D)
F) None of the above

Question 9

When a state levies a sales tax,the tax

Accepted Answer

A)   is paid only by the state's residents.
B)   occasionally excludes items that are deemed to be necessities.
C)   is commonly levied on labor services.
D)   applies to wholesale purchases but not retail purchases.E) B) and C)
F) C) and D)

Question 10

In 2007,approximately how much of federal government spending went to Social Security?

Accepted Answer

A)   10%
B)   20%
C)   30%
D)   40%E) A) and C)
F) None of the above

Question 11

Table 12-1
 
-Refer to Table 12-1.If Andrea has $85,000 in taxable income,her average tax rate is

Accepted Answer

A)   19.7%.
B)   20.3%.
C)   21.4%.
D)   22.6%.E) A) and B)
F) A) and C)

Question 12

Table 12-4
 
-The deadweight loss associated with a tax on a commodity is generated by

Accepted Answer

A)   the consumers who still choose to consume the commodity but pay a higher price that reflects the tax.
B)   the consumers who choose to not consume the commodity that is taxed.
C)   all citizens who are able to use services provided by government.
D)   the consumers who are unable to avoid paying the tax.E) B) and C)
F) C) and D)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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.For an individual with $200,000 in taxable income,which tax schedule has the highest average tax rate?

Accepted Answer

A)   Tax Schedule A
B)   Tax Schedule B
C)   Tax Schedule C
D)   Tax Schedule DE) A) and B)
F) B) and C)

Question 15

Horizontal equity refers to a tax system in which individuals with similar incomes pay similar taxes.

Accepted Answer

A) True 
 B)False

Question 16

Table 12-17
 
-Refer to Table 12-17.A proportional tax is illustrated by tax

Accepted Answer

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

Question 17

Which tax system requires all taxpayers to pay the same percentage of their income in taxes?

Accepted Answer

A)   A regressive tax
B)   A proportional tax
C)   A progressive tax
D)   A horizontal equity taxE) A) and D)
F) None of the above

Question 18

Horizontal and vertical equity are the two primary measures of efficiency of a tax system.

Accepted Answer

A) True 
 B)False

Question 19

If Christopher earns $80,000 in taxable income and pays $20,000 in taxes,his average tax rate is 20 percent.

Accepted Answer

A) True 
 B)False

Question 20

Individual Retirement Accounts and 401(k) plans make the current U.S.tax system

Accepted Answer

A)   less like European tax systems than it otherwise would be.
B)   more like a payroll tax than it otherwise would be.
C)   more like an income tax than it otherwise would be.
D)   more like a consumption tax than it otherwise would be.E) All of the above
F) B) and D)

Exam 12: The Design of the Tax System

When a state levies a sales tax,the tax

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If Christopher earns $80,000 in taxable income and pays $20,000 in taxes,his average tax rate is 20 percent.

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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.For an individual with $200,000 in taxable income,which tax schedule has the highest average tax rate?

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Table 12-1 -Refer to Table 12-1.If Andrea has $85,000 in taxable income,her average tax rate is

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In 2007,approximately how much of federal government spending went to Social Security?

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Poor countries such as India and Pakistan usually have low tax burdens.

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Individual Retirement Accounts and 401(k) plans make the current U.S.tax system

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Horizontal equity refers to a tax system in which individuals with similar incomes pay similar taxes.

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Table 12-3 -Refer to Table 12-3.Assume that the price of a weekend ski pass is $38 and that the price reflects the actual unit cost of providing a weekend of skiing.What is the value of the surplus that accrues to all four skiers from their weekend trip?

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Which tax system requires all taxpayers to pay the same percentage of their income in taxes?

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Table 12-12 United States Income Tax Rates for a Single Individual,2002 and 2003. -Refer to Table 12-12.Charles is a single person whose taxable income is $35,000 a year.What happened to his marginal tax rate between 2002 and 2003?

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A family's income tax liability is

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

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Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Max has taxable income of $227,000,his average tax rate is

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Horizontal and vertical equity are the two primary measures of efficiency of a tax system.

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

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In 2007,social insurance taxes represented approximately what percentage of total receipts for the federal government?

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Table 12-4 -The deadweight loss associated with a tax on a commodity is generated by

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Table 12-12 United States Income Tax Rates for a Single Individual,2002 and 2003. -Refer to Table 12-12.Samantha is a single person whose taxable income is $100,000 a year.What is her average tax rate in 2003?

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Table 12-17 -Refer to Table 12-17.A proportional tax is illustrated by tax

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