Question 1

Which of the following is true about the percent of total income all levels of government in the U.S. take as taxes?

Accepted Answer

A)   In 1902 the government collected about 7 percent of total income. In recent years, it collected about 30 percent of total income.
B)   In 1902 the government collected about 30 percent of total income. In recent years, it collected about 7 percent of total income.
C)   In 1902 the government collected about 7 percent of total income. In recent years, it collected about 7 percent of total income.
D)   In 1902 the government collected about 30 percent of total income. In recent years, it collected about 30 percent of total income.E) All of the above
F) C) and D)

Question 2

If revenue from a cigarette tax is used to pay for healthcare for people with lung cancer, the cigarette tax may be justified on the basis of

Accepted Answer

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

Question 3

Table 12-4
 
-Refer to Table 12-4. What is the marginal tax rate for a person who makes $50,000?

Accepted Answer

A)   25%
B)   28%
C)   40%
D)   60%E) A) and B)
F) B) and D)

Question 4

When taxes are imposed on a commodity,

Accepted Answer

A)   there is never a deadweight loss.
B)   some consumers alter their consumption by not purchasing the taxed commodity.
C)   tax revenue will rise by the amount of the tax multiplied by the before-tax level of consumption.
D)   the taxes do not distort incentives.E) A) and C)
F) A) and D)

Question 5

Athos, Porthos,and Aramis each like to take fencing lessons. The price of a fencing lesson is $10. Athos values a fencing lesson at $15, Porthos at $13, and Aramis at $11. Suppose that if the government taxes fencing lessons at 50 cents each, the price rises to $10.50. A consequence of the tax is that consumer surplus shrinks by

Accepted Answer

A)   $1.50 and tax revenues increase by $1.50, so there is no deadweight loss.
B)   $9.00 and tax revenues increase by $1.50, so there is a deadweight loss of $7.50.
C)   $7.50 and tax revenues increase by $7.50, so there is no deadweight loss.
D)   $7.50 and tax revenues increase by $1.50, so there is a deadweight loss of $6.E) A) and B)
F) A) and C)

Question 6

Briefly describe why some economists prefer a value-added tax (VAT) to an income tax.

Accepted Answer

Some economists believe that t...

Question 7

Incentives to work and save are reduced when

Accepted Answer

A)   income taxes are higher.
B)   consumption taxes replace income taxes.
C)   corrective taxes are implemented.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 8

Define the deadweight loss of a tax.

Accepted Answer

The deadweight loss of a tax i...

Question 9

A person's tax liability refers to

Accepted Answer

A)   the percentage of income that a person must pay in taxes.
B)   the amount of tax a person owes to the government.
C)   the amount of tax the government is required to refund to each person.
D)   deductions that can be legally subtracted from a person's income each year.E) A) and C)
F) All of the above

Question 10

Most analysts expect the largest federal spending category to continue to grow in importance for many years into the future. What category of spending is this?

Accepted Answer

A)   national defense
B)   education
C)   income security
D)   farm support programsE) A) and D)
F) All of the above

Question 11

If we want to gauge the sacrifice made by a taxpayer, we should use the

Accepted Answer

A)   average tax rate.
B)   marginal tax rate.
C)   lump-sum tax rate.
D)   sales tax rate.E) A) and D)
F) All of the above

Question 12

Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.

Accepted Answer

A) True 
 B)False

Question 13

If the government were to impose a tax that assigned everyone the same tax liability, it would be

Accepted Answer

A)   a lump-sum tax.
B)   an equitable tax.
C)   supported by the poor.
D)   a progressive tax.E) B) and D)
F) A) and C)

Question 14

Which of the following in not a reason that a lump-sum tax imposes a minimal administrative burden on taxpayers?

Accepted Answer

A)   Everyone can easily compute the amount of tax owed.
B)   There is no benefit to hiring an accountant to do your taxes.
C)   Everyone owes the same amount of tax, regardless of earnings.
D)   The government can easily forecast tax revenues.E) B) and C)
F) A) and B)

Question 15

Table 12-2
 
-Refer to Table 12-2. Suppose that the government imposes a $2 tax on delights, causing the price to increase from $4.00 to $6.00. Total consumer surplus

Accepted Answer

A)   falls by less than the tax revenue generated.
B)   falls by more than the tax revenue generated.
C)   falls by the same amount as the tax revenue generated.
D)   will not fall since Jennifer will no longer be in the market.E) B) and D)
F) C) and D)

Question 16

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.
 
-Refer to Table 12-9. Harry is a single person whose taxable income is $35,000 a year. What is his marginal tax rate in 2013?

Accepted Answer

A)   10%
B)   15%
C)   27%
D)   30%E) None of the above
F) All of the above

Question 17

If transfer payments are included when evaluating tax burdens, then the average tax rate of the poorest quintile of taxpayers would be approximately

Accepted Answer

A)   negative 30 percent.
B)   negative 10 percent.
C)   positive 1 percent.
D)   positive 8 percent.E) A) and B)
F) None of the above

Question 18

Most people in the United States believe that our tax system should be both and .

Accepted Answer

efficient;...

Question 19

As government debt increases,

Accepted Answer

A)   Congress will reduce spending by an equal proportion.
B)   the government must spend more revenue on interest payments.
C)   a trade-off with government deficits is inevitable.
D)   tax rates must rise to cover the deficit.E) None of the above
F) All of the above

Question 20

The most common explanation for Social Security payments accounting for a larger share of federal government expenditures is

Accepted Answer

A)   increases in life expectancy.
B)   people becoming eligible for Social Security benefits at an earlier age.
C)   increases in birth rates among teenagers and the poor.
D)   falling payroll tax receipts.E) A) and B)
F) None of the above

Exam 12: The Design of the Tax System

When taxes are imposed on a commodity,

Correct Answer
verified

Which of the following in not a reason that a lump-sum tax imposes a minimal administrative burden on taxpayers?

Correct Answer
verified

A person's tax liability refers to

Correct Answer
verified

Define the deadweight loss of a tax.

Correct Answer
verified
The deadweight loss of a tax i...
View Answer

If we want to gauge the sacrifice made by a taxpayer, we should use the

Correct Answer
verified

Incentives to work and save are reduced when

Correct Answer
verified

As government debt increases,

Correct Answer
verified

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Harry is a single person whose taxable income is $35,000 a year. What is his marginal tax rate in 2013?

Correct Answer
verified

Most people in the United States believe that our tax system should be both and .

Correct Answer
verified
efficient;...
View Answer

If transfer payments are included when evaluating tax burdens, then the average tax rate of the poorest quintile of taxpayers would be approximately

Correct Answer
verified

If revenue from a cigarette tax is used to pay for healthcare for people with lung cancer, the cigarette tax may be justified on the basis of

Correct Answer
verified

Table 12-4 -Refer to Table 12-4. What is the marginal tax rate for a person who makes $50,000?

Correct Answer
verified

Most analysts expect the largest federal spending category to continue to grow in importance for many years into the future. What category of spending is this?

Correct Answer
verified

Table 12-2 -Refer to Table 12-2. Suppose that the government imposes a $2 tax on delights, causing the price to increase from $4.00 to $6.00. Total consumer surplus

Correct Answer
verified

Correct Answer
verified

Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.

Correct Answer
verified

Which of the following is true about the percent of total income all levels of government in the U.S. take as taxes?

Correct Answer
verified

If the government were to impose a tax that assigned everyone the same tax liability, it would be

Correct Answer
verified

Briefly describe why some economists prefer a value-added tax (VAT) to an income tax.

Correct Answer
verified
Some economists believe that t...
View Answer

The most common explanation for Social Security payments accounting for a larger share of federal government expenditures is

Correct Answer
verified

Exam 12: The Design of the Tax System

When taxes are imposed on a commodity,

Correct AnswerverifiedShow Answer

Which of the following in not a reason that a lump-sum tax imposes a minimal administrative burden on taxpayers?

Correct AnswerverifiedShow Answer

A person's tax liability refers to

Correct AnswerverifiedShow Answer

Define the deadweight loss of a tax.

Correct AnswerverifiedThe deadweight loss of a tax i...View AnswerShow Answer

If we want to gauge the sacrifice made by a taxpayer, we should use the

Correct AnswerverifiedShow Answer

Incentives to work and save are reduced when

Correct AnswerverifiedShow Answer

As government debt increases,

Correct AnswerverifiedShow Answer

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Harry is a single person whose taxable income is $35,000 a year. What is his marginal tax rate in 2013?

Correct AnswerverifiedShow Answer

Most people in the United States believe that our tax system should be both and .

Correct Answerverifiedefficient;...View AnswerShow Answer

If transfer payments are included when evaluating tax burdens, then the average tax rate of the poorest quintile of taxpayers would be approximately

Correct AnswerverifiedShow Answer

If revenue from a cigarette tax is used to pay for healthcare for people with lung cancer, the cigarette tax may be justified on the basis of

Correct AnswerverifiedShow Answer

Table 12-4 -Refer to Table 12-4. What is the marginal tax rate for a person who makes $50,000?

Correct AnswerverifiedShow Answer

Most analysts expect the largest federal spending category to continue to grow in importance for many years into the future. What category of spending is this?

Correct AnswerverifiedShow Answer

Table 12-2 -Refer to Table 12-2. Suppose that the government imposes a $2 tax on delights, causing the price to increase from $4.00 to $6.00. Total consumer surplus

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.

Correct AnswerverifiedShow Answer

Which of the following is true about the percent of total income all levels of government in the U.S. take as taxes?

Correct AnswerverifiedShow Answer

If the government were to impose a tax that assigned everyone the same tax liability, it would be

Correct AnswerverifiedShow Answer

Briefly describe why some economists prefer a value-added tax (VAT) to an income tax.

Correct AnswerverifiedSome economists believe that t...View AnswerShow Answer

The most common explanation for Social Security payments accounting for a larger share of federal government expenditures is

Correct AnswerverifiedShow Answer

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The deadweight loss of a tax i...
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efficient;...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Some economists believe that t...
View Answer

Correct Answer
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