Question 1

The U.S.tax code gives preferential treatment to investors in municipal bonds.This is an example of

Accepted Answer

A)  a tax loophole. 
B)  tax evasion. 
C)  an administrative burden. 
D)  tax enforcement. 
A)  a tax loophole. 
B)  tax evasion. 
C)  an administrative burden. 
D)  tax enforcement.

Question 2

In the United States,the marginal tax rate on individual federal income tax

Accepted Answer

A)  decreases as income increases. 
B)  increases as income increases. 
C)  is constant at all income levels. 
D)  applies only to payroll taxes. 
A)  decreases as income increases. 
B)  increases as income increases. 
C)  is constant at all income levels. 
D)  applies only to payroll taxes.

Question 3

For the 2010 calendar year only,the federal estate tax does not exist.Which of the following is not correct?

Accepted Answer

A)  The one year absence of this tax creates peculiar incentives for people with large estates who are nearing the end of their lives. 
B)  Some people created provisions in their health-care proxies allowing for life support to continue until 2010 so the estate beneficiaries would receive a larger bequest. 
C)  The estate tax usually applies to about 5,500 taxpayers per year. 
D)  Before 2010, the estate tax was approximately 20 percent of the total estate. 
A)  The one year absence of this tax creates peculiar incentives for people with large estates who are nearing the end of their lives. 
B)  Some people created provisions in their health-care proxies allowing for life support to continue until 2010 so the estate beneficiaries would receive a larger bequest. 
C)  The estate tax usually applies to about 5,500 taxpayers per year. 
D)  Before 2010, the estate tax was approximately 20 percent of the total estate.

Question 4

Table 12-12
United States Income Tax Rates for a Single Individual, 2009 and 2010.
  
-Refer to Table 12-12.What type of tax structure does the United States have in 2010 for single individuals?

Accepted Answer

A)  A proportional tax structure 
B)  A regressive tax structure 
C)  A progressive tax structure 
D)  A lump-sum tax structure 
A)  A proportional tax structure 
B)  A regressive tax structure 
C)  A progressive tax structure 
D)  A lump-sum tax structure

Question 5

Table 12-1
  
-Refer to Table 12-1.If Damian has $33,000 in taxable income,his tax liability will be

Accepted Answer

A)  $4,531. 
B)  $4,678. 
C)  $4,950. 
D)  $8,269. 
A)  $4,531. 
B)  $4,678. 
C)  $4,950. 
D)  $8,269.

Question 6

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 7

Why do some policymakers support a consumption tax rather than an earnings tax?

Accepted Answer

A)  The average tax rate would be lower under a consumption tax. 
B)  A consumption tax would encourage people to save earned income. 
C)  A consumption tax would raise more revenues than an income tax. 
D)  The marginal tax rate would be higher under an earnings tax. 
A)  The average tax rate would be lower under a consumption tax. 
B)  A consumption tax would encourage people to save earned income. 
C)  A consumption tax would raise more revenues than an income tax. 
D)  The marginal tax rate would be higher under an earnings tax.

Question 8

When the total surplus lost as a result of a tax is less than the amount of tax revenue collected by the government there is a deadweight loss.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following countries has the largest tax burden?

Accepted Answer

A)  Brazil 
B)  Germany 
C)  United States 
D)  Sweden 
A)  Brazil 
B)  Germany 
C)  United States 
D)  Sweden

Question 10

Table 12-11
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 12-11.Which tax schedules are proportional?

Accepted Answer

A)  Tax Schedule B only 
B)  Tax Schedule B and Tax Schedule C 
C)  Tax Schedule D only 
D)  Tax Schedule A and Tax Schedule B 
A)  Tax Schedule B only 
B)  Tax Schedule B and Tax Schedule C 
C)  Tax Schedule D only 
D)  Tax Schedule A and Tax Schedule B

Question 11

As a nation gets richer,the government typically takes

Accepted Answer

A)  a constant share of income in taxes. 
B)  a smaller share of income in taxes. 
C)  a larger share of income in taxes. 
D)  There is little evidence of a relationship between income and taxes for most countries. 
A)  a constant share of income in taxes. 
B)  a smaller share of income in taxes. 
C)  a larger share of income in taxes. 
D)  There is little evidence of a relationship between income and taxes for most countries.

Question 12

All of the following are transfer payments except

Accepted Answer

A)  Medicaid. 
B)  unemployment compensation. 
C)  personal income taxes. 
D)  Food Stamps. 
A)  Medicaid. 
B)  unemployment compensation. 
C)  personal income taxes. 
D)  Food Stamps.

Question 13

In 2009,approximately what percentage of federal government receipts came from individual income taxes?

Accepted Answer

A)  15% 
B)  30% 
C)  43% 
D)  60% 
A)  15% 
B)  30% 
C)  43% 
D)  60%

Question 14

Table 12-12
United States Income Tax Rates for a Single Individual, 2009 and 2010.
  
-Refer to Table 12-12.Mia is a single person whose taxable income is $100,000 a year.What is her marginal tax rate in 2010?

Accepted Answer

A)  15% 
B)  27% 
C)  30% 
D)  35% 
A)  15% 
B)  27% 
C)  30% 
D)  35%

Question 15

Which of the following statements about state income taxes is correct?

Accepted Answer

A)  Some states do not tax income at all. 
B)  If states tax income, they must follow federal guidelines for designing the tax structure. 
C)  States are not allowed to have a higher marginal tax rate than the federal marginal tax rate. 
D)  All of the above are correct. 
A)  Some states do not tax income at all. 
B)  If states tax income, they must follow federal guidelines for designing the tax structure. 
C)  States are not allowed to have a higher marginal tax rate than the federal marginal tax rate. 
D)  All of the above are correct.

Question 16

A budget deficit occurs when government receipts exceed government spending.

Accepted Answer

A) True 
 B)False

Question 17

When taxes are imposed on a commodity,

Accepted Answer

A)  there is never a deadweight loss. 
B)  some consumers alter their consumption by not purchasing the taxed commodity. 
C)  tax revenue will rise by the amount of the tax multiplied by the before-tax level of consumption. 
D)  the taxes do not distort incentives. 
A)  there is never a deadweight loss. 
B)  some consumers alter their consumption by not purchasing the taxed commodity. 
C)  tax revenue will rise by the amount of the tax multiplied by the before-tax level of consumption. 
D)  the taxes do not distort incentives.

Question 18

A lump sum tax can never have horizontal equity.

Accepted Answer

A) True 
 B)False

Question 19

With a lump-sum tax,

Accepted Answer

A)  the average tax rate for high income taxpayers will be the same as the average tax rate for low income taxpayers. 
B)  the average tax rate for high income taxpayers will be lower than the average tax rate for low income taxpayers. 
C)  the average tax rate for high income taxpayers will be higher than the average tax rate for high income taxpayers. 
D)  Any of the above could be true under a regressive tax system. 
A)  the average tax rate for high income taxpayers will be the same as the average tax rate for low income taxpayers. 
B)  the average tax rate for high income taxpayers will be lower than the average tax rate for low income taxpayers. 
C)  the average tax rate for high income taxpayers will be higher than the average tax rate for high income taxpayers. 
D)  Any of the above could be true under a regressive tax system.

Question 20

Table 12-6
  
-Refer to Table 12-6.What is the marginal tax rate for a person who makes $50,000?

Accepted Answer

A)  25% 
B)  28% 
C)  40% 
D)  60% 
A)  25% 
B)  28% 
C)  40% 
D)  60%

Exam 12: The Design of the Tax System.

The U.S.tax code gives preferential treatment to investors in municipal bonds.This is an example of

In the United States,the marginal tax rate on individual federal income tax

For the 2010 calendar year only,the federal estate tax does not exist.Which of the following is not correct?

Table 12-12 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-12.What type of tax structure does the United States have in 2010 for single individuals?

Table 12-1 -Refer to Table 12-1.If Damian has $33,000 in taxable income,his tax liability will be

Why do some policymakers support a consumption tax rather than an earnings tax?

When the total surplus lost as a result of a tax is less than the amount of tax revenue collected by the government there is a deadweight loss.

Which of the following countries has the largest tax burden?

Table 12-11 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 12-11.Which tax schedules are proportional?

As a nation gets richer,the government typically takes

All of the following are transfer payments except

In 2009,approximately what percentage of federal government receipts came from individual income taxes?

Table 12-12 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-12.Mia is a single person whose taxable income is $100,000 a year.What is her marginal tax rate in 2010?

Which of the following statements about state income taxes is correct?

A budget deficit occurs when government receipts exceed government spending.

When taxes are imposed on a commodity,

A lump sum tax can never have horizontal equity.

With a lump-sum tax,

Table 12-6 -Refer to Table 12-6.What is the marginal tax rate for a person who makes $50,000?

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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