Question 1

Table 12-16  
-Refer to Table 12-16. The tax system is

Accepted Answer

A) proportional. 
B) regressive. 
C) progressive. 
D) lump sum. 
A) proportional. 
B) regressive. 
C) progressive. 
D) lump sum.

Question 2

Which of the following is an example of a payroll tax?

Accepted Answer

A) a tax on the wages that a firm pays its workers 
B) a "sin" tax on distilled alcohol 
C) a tax on corporate profits 
D) the portion of federal income taxes earmarked to pay for national defense 
A) a tax on the wages that a firm pays its workers 
B) a "sin" tax on distilled alcohol 
C) a tax on corporate profits 
D) the portion of federal income taxes earmarked to pay for national defense

Question 3

According to the ability-to-pay principle, it is fair for people to pay taxes based on their ability to handle the financial burden.

Accepted Answer

A) True 
 B)False

Question 4

In practice, the U.S. income tax system is filled with special provisions that alter a family's tax based on its specific circumstances.

Accepted Answer

A) True 
 B)False

Question 5

High marginal income tax rates

Accepted Answer

A) distort incentives to work. 
B) are used to encourage saving behavior. 
C) will invariably lead to lower average tax rates. 
D) are not associated with deadweight losses. 
A) distort incentives to work. 
B) are used to encourage saving behavior. 
C) will invariably lead to lower average tax rates. 
D) are not associated with deadweight losses.

Question 6

Which of the following tax systems is the most fair?

Accepted Answer

A) proportional taxes 
B) regressive taxes 
C) progressive taxes 
D) There is no objective way to assess fairness among the three systems. 
A) proportional taxes 
B) regressive taxes 
C) progressive taxes 
D) There is no objective way to assess fairness among the three systems.

Question 7

Table 12-15  
-Refer to Table 12-15. The tax system is

Accepted Answer

A) proportional. 
B) regressive. 
C) progressive. 
D) lump sum. 
A) proportional. 
B) regressive. 
C) progressive. 
D) lump sum.

Question 8

​Sonja paid $15,000 in taxes after having earned $100,000. Amanda paid $22,000 in taxes after having earned an income of $146,667.This is an example of a proportional tax.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

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 11

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 12

Scenario 12-3
Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $8 for it. Roger would be willing to pay $11 for his first slice, $9 for his second slice, and $5 for his third slice. The current market price is $5 per slice.
-Refer to Scenario 12-3. Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $9. How much tax revenue will be generated from sales to Regina and Roger?

Accepted Answer

A) zero 
B) $4 
C) $8 
D) $12 
A) zero 
B) $4 
C) $8 
D) $12

Question 13

The benefits principle is used to justify

Accepted Answer

A) sales taxes. 
B) gasoline taxes. 
C) "sin" taxes on cigarettes and alcoholic beverages. 
D) personal income taxes. 
A) sales taxes. 
B) gasoline taxes. 
C) "sin" taxes on cigarettes and alcoholic beverages. 
D) personal income taxes.

Question 14

All of the following are transfer payments except

Accepted Answer

A) welfare payments. 
B) unemployment compensation. 
C) personal income taxes. 
D) Social Security. 
A) welfare payments. 
B) unemployment compensation. 
C) personal income taxes. 
D) Social Security.

Question 15

Table 12-23
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.  
-Refer to Table 12-23. 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 16

Define the deadweight loss of a tax.

Accepted Answer

The deadweight loss of a tax i

Question 17

Table 12-20
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 12-20. Which tax schedules are regressive?

Accepted Answer

A) Tax Schedule A and Tax Schedule B 
B) Tax Schedule B and Tax Schedule C 
C) Tax Schedule C and Tax Schedule D 
D) None of the Tax Schedules are regressive. 
A) Tax Schedule A and Tax Schedule B 
B) Tax Schedule B and Tax Schedule C 
C) Tax Schedule C and Tax Schedule D 
D) None of the Tax Schedules are regressive.

Question 18

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.  
-Refer to Table 12-9. Jake is a single person whose taxable income is $20,000 a year. What is his average tax rate in 2013?

Accepted Answer

A) 10% 
B) 12.5% 
C) 15% 
D) 28% 
A) 10% 
B) 12.5% 
C) 15% 
D) 28%

Question 19

In 2009, the top 1 percent of income earners

Accepted Answer

A) made about 13 percent of all income. 
B) paid about 22 percent of all taxes. 
C) made over 2.5 times the percentage of all income earned by the lowest quintile. 
D) All of the above are correct. 
A) made about 13 percent of all income. 
B) paid about 22 percent of all taxes. 
C) made over 2.5 times the percentage of all income earned by the lowest quintile. 
D) All of the above are correct.

Question 20

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 progressive?

Accepted Answer

A) Tax System A 
B) Tax System B 
C) Tax System C 
D) All of the tax systems are progressive. 
A) Tax System A 
B) Tax System B 
C) Tax System C 
D) All of the tax systems are progressive.

Exam 12: The Design of the Tax System

Table 12-16 -Refer to Table 12-16. The tax system is

Which of the following is an example of a payroll tax?

According to the ability-to-pay principle, it is fair for people to pay taxes based on their ability to handle the financial burden.

In practice, the U.S. income tax system is filled with special provisions that alter a family's tax based on its specific circumstances.

High marginal income tax rates

Which of the following tax systems is the most fair?

Table 12-15 -Refer to Table 12-15. The tax system is

​Sonja paid $15,000 in taxes after having earned $100,000. Amanda paid $22,000 in taxes after having earned an income of $146,667.This is an example of a proportional tax.

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

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

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

The benefits principle is used to justify

All of the following are transfer payments except

Table 12-23 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-23. Which of the three tax systems is regressive?

Define the deadweight loss of a tax.

Table 12-20 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 12-20. Which tax schedules are regressive?

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Jake is a single person whose taxable income is $20,000 a year. What is his average tax rate in 2013?

In 2009, the top 1 percent of income earners

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 progressive?

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

Applications: 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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Sonja paid $15,000 in taxes after having earned $100,000. Amanda paid $22,000 in taxes after having earned an income of $146,667.This is an example of a proportional tax.