Question 1

According to the benefits principle,it is fair for people to pay taxes based on the benefits they receive from the government.

Accepted Answer

A) True 
 B)False

Question 2

Table 12-6
  
-Refer to Table 12-6.What is the average tax rate for a person who makes $130,000?

Accepted Answer

A)  30% 
B)  40% 
C)  50% 
D)  60% 
A)  30% 
B)  40% 
C)  50% 
D)  60%

Question 3

Table 12-1
  
-Refer to Table 12-1.If Agatha has $80,000 in taxable income,her average tax rate is

Accepted Answer

A)  18.5%. 
B)  20.2%. 
C)  21.8%. 
D)  25.0%. 
A)  18.5%. 
B)  20.2%. 
C)  21.8%. 
D)  25.0%.

Question 4

Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country.What is the average income tax rate for an individual who earns $40,000 during the year?

Accepted Answer

A)  0% 
B)  10% 
C)  More than 10% 
D)  The average tax rate cannot be determined without knowing the entire tax schedule. 
A)  0% 
B)  10% 
C)  More than 10% 
D)  The average tax rate cannot be determined without knowing the entire tax schedule.

Question 5

The administrative burden of any tax system is part of the inefficiency it creates.

Accepted Answer

A) True 
 B)False

Question 6

Tax evasion is illegal,but tax avoidance is legal.

Accepted Answer

A) True 
 B)False

Question 7

The U.S.tax burden is high compared to many European countries,but is low compared to many other nations in the world.

Accepted Answer

A) True 
 B)False

Question 8

A mortgage interest deduction would be considered

Accepted Answer

A)  tax evasion. 
B)  a subsidy to the poor. 
C)  a deduction that benefits all members of society equally. 
D)  a tax loophole. 
A)  tax evasion. 
B)  a subsidy to the poor. 
C)  a deduction that benefits all members of society equally. 
D)  a tax loophole.

Question 9

Most analysts expect the largest federal spending category to continue to grow in importance for many years into the future.What category of spending is this?

Accepted Answer

A)  national defense 
B)  Social Security 
C)  income security 
D)  farm support programs 
A)  national defense 
B)  Social Security 
C)  income security 
D)  farm support programs

Question 10

One reason for the projected increase,over the next several decades,in government spending as a percentage of GDP is the projected increase in the size of the elderly population.

Accepted Answer

A) True 
 B)False

Question 11

Table 12-13
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.
  
-Refer to Table 12-13 Which of the three tax systems is regressive?

Accepted Answer

A)  Tax System A 
B)  Tax System B 
C)  Tax System C 
D)  None of the systems are regressive. 
A)  Tax System A 
B)  Tax System B 
C)  Tax System C 
D)  None of the systems are regressive.

Question 12

In many cases,tax loopholes are designed by Congress to

Accepted Answer

A)  give special treatment to specific types of behavior. 
B)  reduce the overall administrative burden of the tax system. 
C)  raise revenues for special projects. 
D)  All of the above are correct. 
A)  give special treatment to specific types of behavior. 
B)  reduce the overall administrative burden of the tax system. 
C)  raise revenues for special projects. 
D)  All of the above are correct.

Question 13

Table 12-7
  
-Refer to Table 12-7.What is the marginal tax rate for a person who makes $37,000?

Accepted Answer

A)  9.25% 
B)  20% 
C)  25% 
D)  40% 
A)  9.25% 
B)  20% 
C)  25% 
D)  40%

Question 14

Federal government spending on income security rose from 13 percent to 15 percent of total federal spending between 2006 and 2009.The most likely cause of this increase is

Accepted Answer

A)  the recession and consequent increase in the number of unemployed citizens. 
B)  the shift in power from Republicans to Democrats. 
C)  wasteful spending due to an abundance of resources. 
D)  an increase in life expectancies. 
A)  the recession and consequent increase in the number of unemployed citizens. 
B)  the shift in power from Republicans to Democrats. 
C)  wasteful spending due to an abundance of resources. 
D)  an increase in life expectancies.

Question 15

Which of the following is not an administrative burden of our tax system?

Accepted Answer

A)  government resources used to enforce tax laws 
B)  keeping tax records throughout the year 
C)  paying the taxes owed 
D)  time spent in April filling out forms 
A)  government resources used to enforce tax laws 
B)  keeping tax records throughout the year 
C)  paying the taxes owed 
D)  time spent in April filling out forms

Question 16

In 2009,the average American paid approximately how much to the federal government in taxes?

Accepted Answer

A)  $1,900 
B)  $4,500 
C)  $6,800 
D)  $8,500 
A)  $1,900 
B)  $4,500 
C)  $6,800 
D)  $8,500

Question 17

Suppose that in 2012 the average citizen's federal tax bill is $14,888 per person,and total federal spending is $13,997 per person.In 2012,the federal government will have

Accepted Answer

A)  a per person budget surplus of $891. 
B)  a per person budget deficit of $891. 
C)  horizontal equity. 
D)  vertical equity. 
A)  a per person budget surplus of $891. 
B)  a per person budget deficit of $891. 
C)  horizontal equity. 
D)  vertical equity.

Question 18

The "other" category of federal spending consists of many less expensive functions of government,including all of the following except

Accepted Answer

A)  housing credit programs. 
B)  farm support programs. 
C)  funding for the National Institutes of Health. 
D)  the federal court system. 
A)  housing credit programs. 
B)  farm support programs. 
C)  funding for the National Institutes of Health. 
D)  the federal court system.

Question 19

Part of the administrative burden of a tax is

Accepted Answer

A)  the money people pay to the government in taxes. 
B)  reducing the size of the market because of the tax. 
C)  the hassle of filling out tax forms that is imposed on taxpayers who comply with the tax. 
D)  the cost of administering programs that use tax revenue. 
A)  the money people pay to the government in taxes. 
B)  reducing the size of the market because of the tax. 
C)  the hassle of filling out tax forms that is imposed on taxpayers who comply with the tax. 
D)  the cost of administering programs that use tax revenue.

Question 20

If we want to gauge the sacrifice made by a taxpayer,we should use the

Accepted Answer

A)  average tax rate. 
B)  marginal tax rate. 
C)  lump-sum tax rate. 
D)  sales tax rate. 
A)  average tax rate. 
B)  marginal tax rate. 
C)  lump-sum tax rate. 
D)  sales tax rate.

Exam 12: The Design of the Tax System.

According to the benefits principle,it is fair for people to pay taxes based on the benefits they receive from the government.

Table 12-6 -Refer to Table 12-6.What is the average tax rate for a person who makes $130,000?

Table 12-1 -Refer to Table 12-1.If Agatha has $80,000 in taxable income,her average tax rate is

Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country.What is the average income tax rate for an individual who earns $40,000 during the year?

The administrative burden of any tax system is part of the inefficiency it creates.

Tax evasion is illegal,but tax avoidance is legal.

The U.S.tax burden is high compared to many European countries,but is low compared to many other nations in the world.

A mortgage interest deduction would be considered

Most analysts expect the largest federal spending category to continue to grow in importance for many years into the future.What category of spending is this?

One reason for the projected increase,over the next several decades,in government spending as a percentage of GDP is the projected increase in the size of the elderly population.

Table 12-13 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-13 Which of the three tax systems is regressive?

In many cases,tax loopholes are designed by Congress to

Table 12-7 -Refer to Table 12-7.What is the marginal tax rate for a person who makes $37,000?

Federal government spending on income security rose from 13 percent to 15 percent of total federal spending between 2006 and 2009.The most likely cause of this increase is

Which of the following is not an administrative burden of our tax system?

In 2009,the average American paid approximately how much to the federal government in taxes?

Suppose that in 2012 the average citizen's federal tax bill is $14,888 per person,and total federal spending is $13,997 per person.In 2012,the federal government will have

The "other" category of federal spending consists of many less expensive functions of government,including all of the following except

Part of the administrative burden of a tax is

If we want to gauge the sacrifice made by a taxpayer,we should use the

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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