Question 1

Table 12-1
  
-Refer to Table 12-1.If Damian has $33,000 in taxable income,his marginal tax rate is

Accepted Answer

A)  10%. 
B)  15%. 
C)  25%. 
D)  28%. 
A)  10%. 
B)  15%. 
C)  25%. 
D)  28%.

Question 2

Lump-sum taxes are equitable but not efficient.

Accepted Answer

A) True 
 B)False

Question 3

Table 12-10
The following table shows the marginal tax rates for unmarried individuals for two years.
  
-Refer to Table 12-10.For an individual who earned $35,000 in taxable income in both years,which of the following describes the change in the individual's marginal tax rate between the two years?

Accepted Answer

A)  The marginal tax rate increased from 2009 to 2010. 
B)  The marginal tax rate decreased from 2009 to 2010. 
C)  The marginal tax rate remained constant from 2009 to 2010. 
D)  The change in the marginal tax rate cannot be determined for the two tax schedules shown. 
A)  The marginal tax rate increased from 2009 to 2010. 
B)  The marginal tax rate decreased from 2009 to 2010. 
C)  The marginal tax rate remained constant from 2009 to 2010. 
D)  The change in the marginal tax rate cannot be determined for the two tax schedules shown.

Question 4

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)  cannot impose state excise taxes on products that are taxed by the federal government. 
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)  cannot impose state excise taxes on products that are taxed by the federal government.

Question 5

Goals of efficiency and equity in tax policy are

Accepted Answer

A)  complementary in most countries. 
B)  necessary for application of the ability-to-pay principle. 
C)  often in conflict with each other. 
D)  easier to achieve when tax codes are complex. 
A)  complementary in most countries. 
B)  necessary for application of the ability-to-pay principle. 
C)  often in conflict with each other. 
D)  easier to achieve when tax codes are complex.

Question 6

Tim earns income of $60,000 per year and pays $21,000 per year in taxes.Tim paid 20 percent in taxes on the first $30,000 he earned.What was the marginal tax rate on the second $30,000 he earned?

Accepted Answer

A)  20 percent 
B)  30 percent 
C)  50 percent 
D)  70 percent 
A)  20 percent 
B)  30 percent 
C)  50 percent 
D)  70 percent

Question 7

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 8

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 9

A tax system with little deadweight loss and a small administrative burden would be described as

Accepted Answer

A)  equitable. 
B)  communistic. 
C)  capitalistic. 
D)  efficient. 
A)  equitable. 
B)  communistic. 
C)  capitalistic. 
D)  efficient.

Question 10

A budget surplus occurs when government receipts fall short of government spending.

Accepted Answer

A) True 
 B)False

Question 11

Horizontal equity refers to a tax system in which individuals with similar incomes pay similar taxes.

Accepted Answer

A) True 
 B)False

Question 12

Suppose Jack values an ice cream sundae at $4.Dianne values an ice cream sundae at $6.The pre-tax price of an ice cream sundae is $2.The government imposes a "fat tax" of $3 on each ice cream sundae,and the price rises to $5.The deadweight loss from the tax is

Accepted Answer

A)  $4, and the deadweight loss comes from both Jack and Dianne. 
B)  $4, and the deadweight loss comes only from Jack because he does not buy a sundae after the tax. 
C)  $2, and the deadweight loss comes from both Jack and Dianne. 
D)  $2, and the deadweight loss comes only from Jack because he does not buy a sundae after the tax. 
A)  $4, and the deadweight loss comes from both Jack and Dianne. 
B)  $4, and the deadweight loss comes only from Jack because he does not buy a sundae after the tax. 
C)  $2, and the deadweight loss comes from both Jack and Dianne. 
D)  $2, and the deadweight loss comes only from Jack because he does not buy a sundae after the tax.

Question 13

Use Table A to complete Table B.

Accepted Answer

The answer of Use Table A to complete Table B.
...

Question 14

If your income is $40,000 and your income tax liability is $5,000,your

Accepted Answer

A)  marginal tax rate is 8 percent. 
B)  average tax rate is 8 percent. 
C)  marginal tax rate is 12.5 percent. 
D)  average tax rate is 12.5 percent. 
A)  marginal tax rate is 8 percent. 
B)  average tax rate is 8 percent. 
C)  marginal tax rate is 12.5 percent. 
D)  average tax rate is 12.5 percent.

Question 15

Suppose the government imposes a tax of 20 percent on the first $50,000 of income and 30 percent on all income above $50,000.What is the average tax rate when income is $60,000?

Accepted Answer

A)  21.7 percent 
B)  25.0 percent 
C)  46.7 percent 
D)  50.0 percent 
A)  21.7 percent 
B)  25.0 percent 
C)  46.7 percent 
D)  50.0 percent

Question 16

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

Accepted Answer

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

Question 17

List the three most important expenditure programs of the federal government.How do they differ from the three most important expenditure programs of state and local governments? Explain why it makes more sense for the federal government to purchase "national defense" rather than state governments.

Accepted Answer

The three most important expenditure pro

Question 18

Scenario 12-2
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 12-2.Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $9.What is Regina's consumer surplus from cheesecake?

Accepted Answer

A)  zero 
B)  $2 
C)  $3 
D)  $6 
A)  zero 
B)  $2 
C)  $3 
D)  $6

Question 19

Suppose Jack values an ice cream sundae at $4.Dianne values an ice cream sundae at $6.The pre-tax price of an ice cream sundae is $2.The government imposes a "fat tax" of $3 on each ice cream sundae,and the price rises to $5.The deadweight loss from the tax is

Accepted Answer

A)  $1. 
B)  $2. 
C)  $3. 
D)  $4. 
A)  $1. 
B)  $2. 
C)  $3. 
D)  $4.

Question 20

Most people agree that taxes should impose as small a cost on society as possible and that the burden of taxes should be distributed fairly.

Accepted Answer

A) True 
 B)False

Exam 12: The Design of the Tax System.

Table 12-1 -Refer to Table 12-1.If Damian has $33,000 in taxable income,his marginal tax rate is

Lump-sum taxes are equitable but not efficient.

Table 12-10 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-10.For an individual who earned $35,000 in taxable income in both years,which of the following describes the change in the individual's marginal tax rate between the two years?

State and local governments

Goals of efficiency and equity in tax policy are

Tim earns income of $60,000 per year and pays $21,000 per year in taxes.Tim paid 20 percent in taxes on the first $30,000 he earned.What was the marginal tax rate on the second $30,000 he earned?

The largest source of revenue for the federal government is the

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

A tax system with little deadweight loss and a small administrative burden would be described as

A budget surplus occurs when government receipts fall short of government spending.

Horizontal equity refers to a tax system in which individuals with similar incomes pay similar taxes.

Suppose Jack values an ice cream sundae at $4.Dianne values an ice cream sundae at $6.The pre-tax price of an ice cream sundae is $2.The government imposes a "fat tax" of $3 on each ice cream sundae,and the price rises to $5.The deadweight loss from the tax is

Use Table A to complete Table B.

If your income is $40,000 and your income tax liability is $5,000,your

Suppose the government imposes a tax of 20 percent on the first $50,000 of income and 30 percent on all income above $50,000.What is the average tax rate when income is $60,000?

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

List the three most important expenditure programs of the federal government.How do they differ from the three most important expenditure programs of state and local governments? Explain why it makes more sense for the federal government to purchase "national defense" rather than state governments.

Suppose Jack values an ice cream sundae at $4.Dianne values an ice cream sundae at $6.The pre-tax price of an ice cream sundae is $2.The government imposes a "fat tax" of $3 on each ice cream sundae,and the price rises to $5.The deadweight loss from the tax is

Most people agree that taxes should impose as small a cost on society as possible and that the burden of taxes should be distributed fairly.

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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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