Exam 7: Taxes

Criteria that economists use in selecting a tax system include:

FICA taxes are considered to be:

A tax system _____ when it minimizes the direct and indirect costs to the economy of tax collection.

Determining who bears the burden of the tax is a question about:

Use the following to answer questions: Figure: The Market for Yachts -(Figure: The Market for Yachts) Look at the figure The Market for Yachts. If the government imposes a $60,000 tax on yachts and collects it from the consumers, the _____ curve will shift _____ by _____.

If tax efficiency is the only goal, a tax system should be designed to minimize its:

A principle suggesting that people with more income or wealth should pay more taxes is the _____ principle.

Income tax rates are such that Mr. R. Hood earns $35,000 per year and pays $7,000 in taxes, while Mr. G. Gisbourne earns $1 million per year and pays $200,000 in taxes. This tax is:

The argument for progressive taxes is based on the ability-to-pay principle.

Use the following to answer questions: Figure: The Market for Yachts -(Figure: The Market for Yachts) Look at the figure The Market for Yachts. If the government imposes a $30,000 tax on yachts (collected from the producers), consumers will pay _____ of the tax and producers will pay _____.

Which of the following taxes best illustrates the ability-to-pay principle of tax fairness?

A higher rate is most likely to decrease the amount of revenue that the government collects from an excise tax if demand is _____ and supply is _____.

Which of the following taxes best illustrates the benefits principle of tax fairness?

Suppose Governor Meridias decides to initiate a state income tax. The first $50,000 of household income is tax-free, while any income above $50,000 is taxed at 10%. The marginal tax rate for a household earning $75,000 is:

The evidence suggests that federal taxes in the U.S. economy are:

Use the following to answer questions: Figure: The Market for Yachts -(Figure: The Market for Yachts) Look at the figure The Market for Yachts. A quota of _____ will bring about the same price and output in the market for yachts as would an excise tax of $60,000.

A tax of $15 on an income of $200, $10 on an income of $300, and $8 on an income of $400 is:

Use the following to answer questions: -(Table: Taxes, Spending, and Income) Suppose Governor Meridias decides to initiate a state income tax. The first $50,000 of household income is tax-free, while any income above $50,000 is taxed at 10%. The tax rate for a household earning $75,000 is:

Suppose the government imposes a $9 per month tax on cell phone service. If the demand curve for cell phone service is perfectly elastic and the supply curve is upward-sloping, the monthly price for cell phone service will:

Use the following to answer questions: Figure: The Gasoline Market -(Figure: The Gasoline Market) Look at the figure The Gasoline Market. The pretax equilibrium price is $3, and the equilibrium quantity before tax is 20,000 gallons. An excise tax has been levied on each gallon of gasoline supplied by producers, shifting the supply curve upward. What is the tax rate?