Question 1

Who observed that "in this world nothing is certain but death and taxes"?

Accepted Answer

A) Mark Twain 
B) P.T. Barnum 
C) Ben Franklin 
D) Richard Nixon 
A) Mark Twain 
B) P.T. Barnum 
C) Ben Franklin 
D) Richard Nixon

Question 2

In 1789, the average American paid approximately what percent of income in taxes?

Accepted Answer

A) 5% 
B) 15% 
C) 33% 
D) 50% 
A) 5% 
B) 15% 
C) 33% 
D) 50%

Question 3

An optimal tax is one that minimizes the

Accepted Answer

A) external benefit. 
B) total deadweight loss from the tax. 
C) income taxes. 
D) horizontal equity. 
A) external benefit. 
B) total deadweight loss from the tax. 
C) income taxes. 
D) horizontal equity.

Question 4

Over the past century in the U.S., what has been federal government revenue as a percentage of GDP? What has been state and local government revenue as a percentage of GDP?

Accepted Answer

According to Figure 1, in 1913, the fede

Question 5

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. 
A) ability-to-pay principle. 
B) benefits principle. 
C) vertical-equity principle. 
D) horizontal-equity principle.

Question 6

A family's tax liability is the amount of money it owes in taxes.

Accepted Answer

A) True 
 B)False

Question 7

Taxes can create deadweight losses because they

Accepted Answer

A) allow the government to fund private goods. 
B) create administrative burdens as people comply with tax laws. 
C) allow the government to fund public goods. 
D) Both b and c are correct. 
A) allow the government to fund private goods. 
B) create administrative burdens as people comply with tax laws. 
C) allow the government to fund public goods. 
D) Both b and c are correct.

Question 8

Table 12-21
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.  
-Refer to Table 12-21. Which of the three tax systems is regressive?

Accepted Answer

A) Tax System A 
B) Tax System B 
C) Tax System C 
D) None of the systems are regressive. 
A) Tax System A 
B) Tax System B 
C) Tax System C 
D) None of the systems are regressive.

Question 9

The principle that people should pay taxes based on the benefits they receive from government services is called the

Accepted Answer

A) pay principle. 
B) tax-benefit principle. 
C) government services principle. 
D) benefits principle. 
A) pay principle. 
B) tax-benefit principle. 
C) government services principle. 
D) benefits principle.

Question 10

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

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
A) A. 
B) B. 
C) C. 
D) D.

Question 11

Suppose Luke values a scoop of Italian gelato at $4. Leia values a scoop of Italian gelato at $6. The pre-tax price of a scoop of Italian gelato is $2. The government imposes a "fat tax" of $3 on each scoop of Italian gelato, and the price rises to $5. The deadweight loss from the tax is

Accepted Answer

A) $4, and the deadweight loss comes from both Luke and Leia. 
B) $4, and the deadweight loss comes only from Luke because he does not buy gelato after the tax. 
C) $2, and the deadweight loss comes from both Luke and Leia. 
D) $2, and the deadweight loss comes only from Luke because he does not buy gelato after the tax. 
A) $4, and the deadweight loss comes from both Luke and Leia. 
B) $4, and the deadweight loss comes only from Luke because he does not buy gelato after the tax. 
C) $2, and the deadweight loss comes from both Luke and Leia. 
D) $2, and the deadweight loss comes only from Luke because he does not buy gelato after the tax.

Question 12

As a person's or family's income rises, the marginal federal income tax rate __________.

Accepted Answer

The answer of As a person's or family's income rises,...

Question 13

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 14

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

Accepted Answer

A) True 
 B)False

Question 15

An excise tax is a tax on a specific good, like gasoline.

Accepted Answer

A) True 
 B)False

Question 16

Table 12-11  
-Refer to Table 12-11. If Bud has taxable income of $78,000, his average tax rate is

Accepted Answer

A) 18.7%. 
B) 19.3%. 
C) 20.1%. 
D) 34.0%. 
A) 18.7%. 
B) 19.3%. 
C) 20.1%. 
D) 34.0%.

Question 17

An income tax in which the average tax rate is the same for all taxpayers would be considered a

Accepted Answer

A) progressive tax. 
B) regressive tax. 
C) distortion-free tax. 
D) proportional tax. 
A) progressive tax. 
B) regressive tax. 
C) distortion-free tax. 
D) proportional tax.

Question 18

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.  
-Refer to Table 12-9. Samantha is a single person whose taxable income is $100,000 a year. What is her average tax rate in 2013?

Accepted Answer

A) 24.1% 
B) 26.4% 
C) 27.8% 
D) 30.9% 
A) 24.1% 
B) 26.4% 
C) 27.8% 
D) 30.9%

Question 19

The average American pays a higher percent of his income in taxes today than he would have in the late 18th century.

Accepted Answer

A) True 
 B)False

Question 20

If tax revenues from a cigarette tax are used to pay for healthcare expenses related to lung cancer, the cigarette tax could be justified using the __________.

Accepted Answer

The answer of If tax revenues from a cigarette tax...

Exam 12: The Design of the Tax System

Who observed that "in this world nothing is certain but death and taxes"?

In 1789, the average American paid approximately what percent of income in taxes?

An optimal tax is one that minimizes the

Over the past century in the U.S., what has been federal government revenue as a percentage of GDP? What has been state and local government revenue as a percentage of GDP?

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

A family's tax liability is the amount of money it owes in taxes.

Taxes can create deadweight losses because they

Table 12-21 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-21. Which of the three tax systems is regressive?

The principle that people should pay taxes based on the benefits they receive from government services is called the

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

Suppose Luke values a scoop of Italian gelato at $4. Leia values a scoop of Italian gelato at $6. The pre-tax price of a scoop of Italian gelato is $2. The government imposes a "fat tax" of $3 on each scoop of Italian gelato, and the price rises to $5. The deadweight loss from the tax is

As a person's or family's income rises, the marginal federal income tax rate __________.

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

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

An excise tax is a tax on a specific good, like gasoline.

Table 12-11 -Refer to Table 12-11. If Bud has taxable income of $78,000, his average tax rate is

An income tax in which the average tax rate is the same for all taxpayers would be considered a

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Samantha is a single person whose taxable income is $100,000 a year. What is her average tax rate in 2013?

The average American pays a higher percent of his income in taxes today than he would have in the late 18th century.

If tax revenues from a cigarette tax are used to pay for healthcare expenses related to lung cancer, the cigarette tax could be justified using the __________.

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

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