Question 1

The government attempts to limit double-taxation of company profits by:

Accepted Answer

A) taxing only the corporation's stockholders 
B) allowing people who receive dividend income to claim credit for tax already paid by the company 
C) taxing only dividends 
D) allowing people who receive income from the company to claim credit for tax already paid on dividends 
A) taxing only the corporation's stockholders 
B) allowing people who receive dividend income to claim credit for tax already paid by the company 
C) taxing only dividends 
D) allowing people who receive income from the company to claim credit for tax already paid on dividends

Question 2

Which of the following statements about the company income tax is false?

Accepted Answer

A) a portion of the company income tax is paid by customers and workers of corporations 
B) if the true incidence of the company income tax were widely known, the tax would be less popular among voters 
C) the company income tax is the best example of the flypaper theory of tax incidence 
D) all of the above are false 
A) a portion of the company income tax is paid by customers and workers of corporations 
B) if the true incidence of the company income tax were widely known, the tax would be less popular among voters 
C) the company income tax is the best example of the flypaper theory of tax incidence 
D) all of the above are false

Question 3

A lump-sum tax imposes a minimal administrative burden on taxpayers because:

Accepted Answer

A) everyone can easily compute the amount of tax they owe 
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) all of the above are true 
A) everyone can easily compute the amount of tax they owe 
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) all of the above are true

Question 4

Determination of the incidence of a tax:

Accepted Answer

A) is not required when one is only interested in issues of equity 
B) is identical to the determination of legal liability for a tax 
C) requires one to evaluate where the tax burden eventually falls 
D) is solely determined by conditions of the 'flypaper theory' of taxation 
A) is not required when one is only interested in issues of equity 
B) is identical to the determination of legal liability for a tax 
C) requires one to evaluate where the tax burden eventually falls 
D) is solely determined by conditions of the 'flypaper theory' of taxation

Question 5

The largest source of revenue for state governments is:

Accepted Answer

A) property tax 
B) transfers from the federal government 
C) individual income tax 
D) tax on goods and services 
A) property tax 
B) transfers from the federal government 
C) individual income tax 
D) tax on goods and services

Question 6

If marginal tax rates decrease, the:

Accepted Answer

A) deadweight loss from taxes is unaffected 
B) deadweight loss from taxes will be reduced 
C) deadweight loss from taxes will rise 
D) average tax rate will be falling 
A) deadweight loss from taxes is unaffected 
B) deadweight loss from taxes will be reduced 
C) deadweight loss from taxes will rise 
D) average tax rate will be falling

Question 7

The GST is an example of a regressive tax.

Accepted Answer

A) True 
 B)False

Question 8

Describe the benefits principle of taxation.Explain why the benefits principle may not be equitable (or efficient) for some of the roles government plays.

Accepted Answer

Benefit principle states that people sho

Question 9

The administrative burden of a tax includes:

Accepted Answer

A) the amount of money people pay as income taxes 
B) the reduction in the size of a market because of the tax 
C) the time and effort of completing tax forms that is imposed on taxpayers who comply with the tax 
D) the cost of administering programs that use tax revenue 
A) the amount of money people pay as income taxes 
B) the reduction in the size of a market because of the tax 
C) the time and effort of completing tax forms that is imposed on taxpayers who comply with the tax 
D) the cost of administering programs that use tax revenue

Question 10

According to the information provided, if a tax of $2 is levied on each bottle of micro-brewed beer, what is the deadweight loss of the tax?

Accepted Answer

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

Question 11

Some welfare groups argue that the GST places a disproportionate tax burden on lower income earners.

Accepted Answer

A) True 
 B)False

Question 12

What is the difference between a consumption tax, an income tax and a tax on carbon? What are they each trying to achieve?

Accepted Answer

A consumption tax is a tax on what peopl

Question 13

The average tax rate is used to calculate the marginal tax rate.

Accepted Answer

A) True 
 B)False

Question 14

Two families, the Smiths and the Jones, live on the Gold Coast, Queensland, and have identical incomes.The Smiths deduct $5000 from their taxable income for mortgage interest paid during the year, while the Jones family lives in an apartment and is not eligible for a mortgage-interest deduction.This situation exemplifies:

Accepted Answer

A) an application of the benefits principle of taxation 
B) a violation of horizontal equity 
C) a violation of vertical equity 
D) an application of egalitarian tax rules 
A) an application of the benefits principle of taxation 
B) a violation of horizontal equity 
C) a violation of vertical equity 
D) an application of egalitarian tax rules

Question 15

A lump-sum tax results in equality between average and marginal tax rates.

Accepted Answer

A) True 
 B)False

Question 16

According to the information provided, if a tax of $4 is levied on each bottle of micro-brewed beer, how much tax revenue will be generated from sales to Jim and Celia?

Accepted Answer

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

Question 17

If higher income taxpayers pay a higher percentage of their income in taxes, then the tax system is classed as progressive.

Accepted Answer

A) True 
 B)False

Question 18

What are some of the arguments for and against the HECS system? Is it a fair system?

Accepted Answer

Answers should refle

Question 19

The federal government collects all tax revenue in Australia and then passes a proportion of it onto the states.

Accepted Answer

A) True 
 B)False

Question 20

Policymakers consider two main objectives when designing a taxation system:

Accepted Answer

A) revenue and debt reduction 
B) equity and efficiency 
C) revenue and expenditures 
D) expenditures and efficiency 
A) revenue and debt reduction 
B) equity and efficiency 
C) revenue and expenditures 
D) expenditures and efficiency

Exam 12: The Design of the Tax System

The government attempts to limit double-taxation of company profits by:

Which of the following statements about the company income tax is false?

A lump-sum tax imposes a minimal administrative burden on taxpayers because:

Determination of the incidence of a tax:

The largest source of revenue for state governments is:

If marginal tax rates decrease, the:

The GST is an example of a regressive tax.

Describe the benefits principle of taxation.Explain why the benefits principle may not be equitable (or efficient) for some of the roles government plays.

The administrative burden of a tax includes:

According to the information provided, if a tax of $2 is levied on each bottle of micro-brewed beer, what is the deadweight loss of the tax?

Some welfare groups argue that the GST places a disproportionate tax burden on lower income earners.

What is the difference between a consumption tax, an income tax and a tax on carbon? What are they each trying to achieve?

The average tax rate is used to calculate the marginal tax rate.

A lump-sum tax results in equality between average and marginal tax rates.

According to the information provided, if a tax of $4 is levied on each bottle of micro-brewed beer, how much tax revenue will be generated from sales to Jim and Celia?

If higher income taxpayers pay a higher percentage of their income in taxes, then the tax system is classed as progressive.

What are some of the arguments for and against the HECS system? Is it a fair system?

The federal government collects all tax revenue in Australia and then passes a proportion of it onto the states.

Policymakers consider two main objectives when designing a taxation system:

Ten Lessons From 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

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

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 Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

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