Question 1

According to the benefits principle, it is fair for people to pay taxes based on the benefits they receive from the government.

Accepted Answer

A) True 
 B)False  True

Question 2

An efficient tax system is one that imposes small

Accepted Answer

A) deadweight losses and administrative burdens. 
B) marginal rates and deadweight losses. 
C) administrative burdens and transfers of money. 
D) marginal rates and transfers of money. 
A) deadweight losses and administrative burdens. 
B) marginal rates and deadweight losses. 
C) administrative burdens and transfers of money. 
D) marginal rates and transfers of money. A

Question 3

Table 12-16  
-Refer to Table 12-16. In this tax system which of the following is possible?

Accepted Answer

A) vertical and horizontal equity 
B) vertical but not horizontal equity 
C) horizontal but not vertical equity 
D) neither horizontal nor vertical equity 
A) vertical and horizontal equity 
B) vertical but not horizontal equity 
C) horizontal but not vertical equity 
D) neither horizontal nor vertical equity A

Question 4

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. 
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.

Question 5

An efficient tax system is one that imposes small deadweight losses and small administrative burdens.

Accepted Answer

A) True 
 B)False

Question 6

Define the average tax rate.

Accepted Answer

The average tax rate

Question 7

The idea that people in equal conditions should pay equal taxes is referred to as

Accepted Answer

A) horizontal equity. 
B) vertical equity. 
C) the ability-to-pay principle. 
D) the marriage tax. 
A) horizontal equity. 
B) vertical equity. 
C) the ability-to-pay principle. 
D) the marriage tax.

Question 8

Country A's tax system is more efficient than Country B's tax system if

Accepted Answer

A) Country A collects less tax revenue than Country B, and the cost to taxpayers is the same in both countries. 
B) Country A collects more tax revenue than Country B, even though the cost to taxpayers is greater in Country A than in Country B. 
C) the same amount of revenue is raised in both countries, but the cost to taxpayers is smaller in Country A than in Country B. 
D) the same amount of revenue is raised in both countries, but the taxes are collected in a shorter amount of time in Country A than in Country B. 
A) Country A collects less tax revenue than Country B, and the cost to taxpayers is the same in both countries. 
B) Country A collects more tax revenue than Country B, even though the cost to taxpayers is greater in Country A than in Country B. 
C) the same amount of revenue is raised in both countries, but the cost to taxpayers is smaller in Country A than in Country B. 
D) the same amount of revenue is raised in both countries, but the taxes are collected in a shorter amount of time in Country A than in Country B.

Question 9

Sue earns income of $80,000 per year. Her average tax rate is 50 percent. Sue paid $5,000 in taxes on the first $30,000 she earned. What was the marginal tax rate on the first $30,000 she earned, and what was the marginal tax rate on the remaining $50,000?

Accepted Answer

A) 6.25 percent and 50.00 percent, respectively 
B) 10.00 percent and 70.00 percent, respectively 
C) 16.67 percent and 60.00 percent, respectively 
D) 16.67 percent and 70.00 percent, respectively 
A) 6.25 percent and 50.00 percent, respectively 
B) 10.00 percent and 70.00 percent, respectively 
C) 16.67 percent and 60.00 percent, respectively 
D) 16.67 percent and 70.00 percent, respectively

Question 10

The claim that all citizens should make an "equal sacrifice" to support government programs is usually associated with

Accepted Answer

A) the ability-to-pay principle. 
B) the benefits principle. 
C) efficiency arguments. 
D) regressive tax arguments. 
A) the ability-to-pay principle. 
B) the benefits principle. 
C) efficiency arguments. 
D) regressive tax arguments.

Question 11

The theory that the wealthy should contribute more to police protection than the poor because they have more to protect is based on

Accepted Answer

A) the ability-to-pay principle. 
B) a consumption tax plan. 
C) the benefits principle. 
D) property tax assessments. 
A) the ability-to-pay principle. 
B) a consumption tax plan. 
C) the benefits principle. 
D) property tax assessments.

Question 12

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. 
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.

Question 13

Some colleges charge all students the same fee for access to campus computing services. Suppose that students differ by how many hours of campus computing services they use. For example, some students print all their papers and assignment in the campus computer labs, while others use their own printers in their apartments. The computing services fee is most like a(n)

Accepted Answer

A) excise tax that conforms to the benefits principle. 
B) excise tax that violates the benefits principle. 
C) lump-sum tax that conforms to the benefits principle. 
D) lump-sum tax that violates the benefits principle. 
A) excise tax that conforms to the benefits principle. 
B) excise tax that violates the benefits principle. 
C) lump-sum tax that conforms to the benefits principle. 
D) lump-sum tax that violates the benefits principle.

Question 14

What has been the relationship over the past century between the U.S. economy's income and the percentage of that income that the government collects in revenues?

Accepted Answer

Both have increased over time, but the p

Question 15

Briefly describe the tradeoff between equity and efficiency of tax systems using a few examples.

Accepted Answer

Although most Americans agree that equit

Question 16

Some colleges charge all students the same "activity fee." Suppose that students differ by how many campus activities they engage in. This charge is most like

Accepted Answer

A) an excise tax which conforms to the benefits principle. 
B) an excise tax which violates the benefits principle. 
C) a lump-sum tax which conforms to the benefits principle. 
D) a lump-sum tax which violates the benefits principle. 
A) an excise tax which conforms to the benefits principle. 
B) an excise tax which violates the benefits principle. 
C) a lump-sum tax which conforms to the benefits principle. 
D) a lump-sum tax which violates the benefits principle.

Question 17

A mortgage interest deduction would be considered

Accepted Answer

A) tax evasion. 
B) a subsidy to the poor. 
C) a deduction that benefits all members of society equally. 
D) a tax loophole. 
A) tax evasion. 
B) a subsidy to the poor. 
C) a deduction that benefits all members of society equally. 
D) a tax loophole.

Question 18

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% 
A) 10% 
B) 15% 
C) 27% 
D) 30%

Question 19

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

Accepted Answer

A) True 
 B)False

Question 20

​Assume a small town decides to build a park by imposing a $2,000 lump-sum tax on each household. If a household's income rises from $50,000 to $75,000, its marginal tax rate is:

Accepted Answer

A) ​0% 
B) ​2.67% 
C) ​4% 
D) ​8% 
A) ​0% 
B) ​2.67% 
C) ​4% 
D) ​8%

Exam 12: The Design of the Tax System

According to the benefits principle, it is fair for people to pay taxes based on the benefits they receive from the government.

An efficient tax system is one that imposes small

Table 12-16 -Refer to Table 12-16. In this tax system which of the following is possible?

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

An efficient tax system is one that imposes small deadweight losses and small administrative burdens.

Define the average tax rate.

The idea that people in equal conditions should pay equal taxes is referred to as

Country A's tax system is more efficient than Country B's tax system if

Sue earns income of $80,000 per year. Her average tax rate is 50 percent. Sue paid $5,000 in taxes on the first $30,000 she earned. What was the marginal tax rate on the first $30,000 she earned, and what was the marginal tax rate on the remaining $50,000?

The claim that all citizens should make an "equal sacrifice" to support government programs is usually associated with

The theory that the wealthy should contribute more to police protection than the poor because they have more to protect is based on

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

What has been the relationship over the past century between the U.S. economy's income and the percentage of that income that the government collects in revenues?

Briefly describe the tradeoff between equity and efficiency of tax systems using a few examples.

Some colleges charge all students the same "activity fee." Suppose that students differ by how many campus activities they engage in. This charge is most like

A mortgage interest deduction would be considered

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?

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

​Assume a small town decides to build a park by imposing a $2,000 lump-sum tax on each household. If a household's income rises from $50,000 to $75,000, its marginal tax rate is:

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Assume a small town decides to build a park by imposing a $2,000 lump-sum tax on each household. If a household's income rises from $50,000 to $75,000, its marginal tax rate is: