Question 1

​In general, the largest sources of revenue for state and local governments come from:

Accepted Answer

A) ​Sales taxes and property taxes 
B) ​Sales taxes and corporate taxes 
C) Property taxes and individual income taxes 
D) Individual income taxes and sales taxes​ 
A) ​Sales taxes and property taxes 
B) ​Sales taxes and corporate taxes 
C) Property taxes and individual income taxes 
D) Individual income taxes and sales taxes​

Question 2

Suppose that in 2020 the average citizen's federal tax bill is $11,888 per person, and total federal spending is $13,997 per person. In 2020, the federal government will have

Accepted Answer

A) a per person budget surplus of $2,109. 
B) a per person budget deficit of $2,109. 
C) horizontal equity. 
D) vertical equity. 
A) a per person budget surplus of $2,109. 
B) a per person budget deficit of $2,109. 
C) horizontal equity. 
D) vertical equity.

Question 3

State and local governments receive the largest portion of their tax revenues from

Accepted Answer

A) sales taxes and income taxes. 
B) income taxes and property taxes. 
C) payroll taxes and income taxes. 
D) property taxes and sales taxes. 
A) sales taxes and income taxes. 
B) income taxes and property taxes. 
C) payroll taxes and income taxes. 
D) property taxes and sales taxes.

Question 4

Suppose the country of Mankiwland has a new king, King Gregory. For the purpose of efficiency King Gregory's chief economic advisor would encourage him to design his country's tax system to minimize
(i)deadweight losses from taxes.
(ii)administrative burdens from taxes.
(iii)the tax payments themselves.
(iv)government expenditures to correct for market failures.

Accepted Answer

A) (i) only 
B) (i) and (ii) only 
C) (iii) and (iv) only 
D) (i), (ii), (iii), and (iv) 
A) (i) only 
B) (i) and (ii) only 
C) (iii) and (iv) only 
D) (i), (ii), (iii), and (iv)

Question 5

State and local governments

Accepted Answer

A) use a mix of taxes and fees to generate revenue. 
B) are required by federal mandate to levy income taxes. 
C) are required to tax property at a standard rate set by the federal government. 
D) must tax wages more heavily than interest and dividend income. 
A) use a mix of taxes and fees to generate revenue. 
B) are required by federal mandate to levy income taxes. 
C) are required to tax property at a standard rate set by the federal government. 
D) must tax wages more heavily than interest and dividend income.

Question 6

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. 
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.

Question 7

A value-added tax or VAT is a tax on

Accepted Answer

A) retail purchases only. 
B) wholesale purchases only. 
C) pollution. 
D) all stages of production of a good. 
A) retail purchases only. 
B) wholesale purchases only. 
C) pollution. 
D) all stages of production of a good.

Question 8

The largest source of revenue for the federal government is the

Accepted Answer

A) individual income tax. 
B) property tax. 
C) sales tax. 
D) corporate income tax. 
A) individual income tax. 
B) property tax. 
C) sales tax. 
D) corporate income tax.

Question 9

A person's marginal tax rate equals

Accepted Answer

A) her tax obligation divided by her average tax rate. 
B) the increase in taxes she would pay as a percentage of the rise in her income. 
C) her tax obligation divided by her income. 
D) the increase in taxes if her average tax rate were to rise by 1percent. 
A) her tax obligation divided by her average tax rate. 
B) the increase in taxes she would pay as a percentage of the rise in her income. 
C) her tax obligation divided by her income. 
D) the increase in taxes if her average tax rate were to rise by 1percent.

Question 10

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.  
-Refer to Table 12-9. Darby is a single person whose taxable income is $320,000 a year. What happened to her average tax rate between 2012 and 2013?

Accepted Answer

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

Question 11

A tax on the wages that a firm pays its workers is called

Accepted Answer

A) an income tax. 
B) an excise tax. 
C) a consumption tax. 
D) a payroll tax. 
A) an income tax. 
B) an excise tax. 
C) a consumption tax. 
D) a payroll tax.

Question 12

Revenues from social insurance taxes are earmarked to pay for Social Security and Medicare.

Accepted Answer

A) True 
 B)False

Question 13

Table 12-15  
-Refer to Table 12-15. 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

Question 14

If James earns $80,000 in taxable income and pays $20,000 in taxes, his average tax rate is 25 percent.

Accepted Answer

A) True 
 B)False

Question 15

Vertical equity and horizontal equity are associated with

Accepted Answer

A) the benefits principle of taxation. 
B) the ability-to-pay principle of taxation. 
C) taxes that have no deadweight losses. 
D) falling marginal tax rates. 
A) the benefits principle of taxation. 
B) the ability-to-pay principle of taxation. 
C) taxes that have no deadweight losses. 
D) falling marginal tax rates.

Question 16

Table 12-10  
-Refer to Table 12-10. If Miss Kay has $80,000 in taxable income, her marginal tax rate is

Accepted Answer

A) 15%. 
B) 25%. 
C) 28%. 
D) 33%. 
A) 15%. 
B) 25%. 
C) 28%. 
D) 33%.

Question 17

Taxes on specific goods such as cigarettes, gasoline, and alcoholic beverages are called

Accepted Answer

A) sales taxes. 
B) excise taxes. 
C) social insurance taxes. 
D) consumption taxes. 
A) sales taxes. 
B) excise taxes. 
C) social insurance taxes. 
D) consumption taxes.

Question 18

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. 
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.

Question 19

With a lump-sum tax, the

Accepted Answer

A) marginal tax rate is always less than the average tax rate. 
B) average tax rate is always less than the marginal tax rate. 
C) marginal tax rate falls as income rises. 
D) marginal tax rate rises as income rises. 
A) marginal tax rate is always less than the average tax rate. 
B) average tax rate is always less than the marginal tax rate. 
C) marginal tax rate falls as income rises. 
D) marginal tax rate rises as income rises.

Question 20

Which of the following statements is not correct?

Accepted Answer

A) All states have state income taxes, but the percentages vary widely. 
B) Sales taxes and property taxes are important revenue sources for state and local governments. 
C) Medicare spending has increased because the percentage of the population that is elderly and the cost of healthcare have both increased. 
D) A budget deficit occurs when government spending exceeds government receipts. 
A) All states have state income taxes, but the percentages vary widely. 
B) Sales taxes and property taxes are important revenue sources for state and local governments. 
C) Medicare spending has increased because the percentage of the population that is elderly and the cost of healthcare have both increased. 
D) A budget deficit occurs when government spending exceeds government receipts.

Exam 12: The Design of the Tax System

​In general, the largest sources of revenue for state and local governments come from:

Suppose that in 2020 the average citizen's federal tax bill is $11,888 per person, and total federal spending is $13,997 per person. In 2020, the federal government will have

State and local governments receive the largest portion of their tax revenues from

State and local governments

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

A value-added tax or VAT is a tax on

The largest source of revenue for the federal government is the

A person's marginal tax rate equals

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Darby is a single person whose taxable income is $320,000 a year. What happened to her average tax rate between 2012 and 2013?

A tax on the wages that a firm pays its workers is called

Revenues from social insurance taxes are earmarked to pay for Social Security and Medicare.

Table 12-15 -Refer to Table 12-15. In this tax system which of the following is possible?

If James earns $80,000 in taxable income and pays $20,000 in taxes, his average tax rate is 25 percent.

Vertical equity and horizontal equity are associated with

Table 12-10 -Refer to Table 12-10. If Miss Kay has $80,000 in taxable income, her marginal tax rate is

Taxes on specific goods such as cigarettes, gasoline, and alcoholic beverages are called

A person's tax liability refers to

With a lump-sum tax, the

Which of the following statements is not correct?

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

In general, the largest sources of revenue for state and local governments come from: