Question 1

Table 12-8
  
-Refer to Table 12-8.If the government imposes a $3,000 lump-sum tax,the marginal tax rate for Charles would be

Accepted Answer

A)  0 percent. 
B)  5 percent. 
C)  6.7 percent. 
D)  10 percent. 
A)  0 percent. 
B)  5 percent. 
C)  6.7 percent. 
D)  10 percent.

Question 2

Which of the following is true about the percent of total income all levels of government in the U.S.take as taxes?

Accepted Answer

A)  In 1902 the government collected about 7 percent of total income. In recent years, it collected about 30 percent of total income. 
B)  In 1902 the government collected about 30 percent of total income. In recent years, it collected about 7 percent of total income. 
C)  In 1902 the government collected about 7 percent of total income. In recent years, it collected about 7 percent of total income. 
D)  In 1902 the government collected about 30 percent of total income. In recent years, it collected about 30 percent of total income. 
A)  In 1902 the government collected about 7 percent of total income. In recent years, it collected about 30 percent of total income. 
B)  In 1902 the government collected about 30 percent of total income. In recent years, it collected about 7 percent of total income. 
C)  In 1902 the government collected about 7 percent of total income. In recent years, it collected about 7 percent of total income. 
D)  In 1902 the government collected about 30 percent of total income. In recent years, it collected about 30 percent of total income.

Question 3

In 2009,which category represented the largest category of spending for the U.S.federal government?

Accepted Answer

A)  Medicare 
B)  Social Security 
C)  national defense 
D)  net interest 
A)  Medicare 
B)  Social Security 
C)  national defense 
D)  net interest

Question 4

Tax evasion is

Accepted Answer

A)  facilitated by legal deductions to taxable income. 
B)  the same as tax avoidance. 
C)  recommended by the American Accounting Association. 
D)  illegal. 
A)  facilitated by legal deductions to taxable income. 
B)  the same as tax avoidance. 
C)  recommended by the American Accounting Association. 
D)  illegal.

Question 5

Which of the following in not a reason that a lump-sum tax imposes a minimal administrative burden on taxpayers?

Accepted Answer

A)  Everyone can easily compute the amount of tax owed. 
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)  The government can easily forecast tax revenues. 
A)  Everyone can easily compute the amount of tax owed. 
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)  The government can easily forecast tax revenues.

Question 6

If James earns $80,000 in taxable income and pays $20,000 in taxes,his average tax rate is 25 percent.

Accepted Answer

A) True 
 B)False

Question 7

The tax that generates the most revenue for state and local government is the

Accepted Answer

A)  corporate income tax. 
B)  individual income tax. 
C)  property tax. 
D)  sales tax. 
A)  corporate income tax. 
B)  individual income tax. 
C)  property tax. 
D)  sales tax.

Question 8

Taxes create deadweight loss when they

Accepted Answer

A)  distort behavior. 
B)  cause the price of the product to increase. 
C)  don't raise sufficient government revenue. 
D)  cannot be computed easily. 
A)  distort behavior. 
B)  cause the price of the product to increase. 
C)  don't raise sufficient government revenue. 
D)  cannot be computed easily.

Question 9

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 marginal tax rate when income is $60,000?

Accepted Answer

A)  10 percent 
B)  20 percent 
C)  30 percent 
D)  50 percent 
A)  10 percent 
B)  20 percent 
C)  30 percent 
D)  50 percent

Question 10

An efficient tax system is one that
(i)maximizes tax revenues.
(ii)minimizes deadweight losses from taxes.
(iii)minimizes administrative burdens from taxes.
(iv)promotes equity across taxpayers.

Accepted Answer

A)  (i) only 
B)  (ii) and (iii) only 
C)  (i), (ii), and (iii) only 
D)  (i), (ii), (iii), and (iv) 
A)  (i) only 
B)  (ii) and (iii) only 
C)  (i), (ii), and (iii) only 
D)  (i), (ii), (iii), and (iv)

Question 11

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 average tax rate in 2009?

Accepted Answer

A)  22.3% 
B)  25.3% 
C)  27.8% 
D)  28.4% 
A)  22.3% 
B)  25.3% 
C)  27.8% 
D)  28.4%

Question 12

State and local governments generate revenue from all of the following sources except

Accepted Answer

A)  sales taxes. 
B)  the federal government. 
C)  corporate income taxes. 
D)  customs duties. 
A)  sales taxes. 
B)  the federal government. 
C)  corporate income taxes. 
D)  customs duties.

Question 13

Which of the following programs is not included in the federal income security spending?

Accepted Answer

A)  Social Security 
B)  Temporary Assistance for Needy Families (TANF) 
C)  Food Stamps 
D)  unemployment compensation 
A)  Social Security 
B)  Temporary Assistance for Needy Families (TANF) 
C)  Food Stamps 
D)  unemployment compensation

Question 14

The public welfare spending category for state and local governments includes

Accepted Answer

A)  many programs that are initiated by private foundations. 
B)  contributions in support of public universities. 
C)  some federal programs that are administered by state and local governments. 
D)  All of the above are correct. 
A)  many programs that are initiated by private foundations. 
B)  contributions in support of public universities. 
C)  some federal programs that are administered by state and local governments. 
D)  All of the above are correct.

Question 15

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000.What are the tax liability and the marginal tax rate for a person whose income is $30,000?

Accepted Answer

A)  both are 10 percent 
B)  10 percent and $2,000, respectively 
C)  $3,000 and 10 percent, respectively 
D)  $3,000 and 20 percent, respectively 
A)  both are 10 percent 
B)  10 percent and $2,000, respectively 
C)  $3,000 and 10 percent, respectively 
D)  $3,000 and 20 percent, respectively

Question 16

If Christopher earns $80,000 in taxable income and pays $20,000 in taxes,his average tax rate is 20 percent.

Accepted Answer

A) True 
 B)False

Question 17

An efficient tax system is one that imposes small deadweight losses and small administrative burdens.

Accepted Answer

A) True 
 B)False

Question 18

In practice,the U.S.income tax system is filled with special provisions that alter a family's tax based on its specific circumstances.

Accepted Answer

A) True 
 B)False

Question 19

The deadweight loss of a tax is

Accepted Answer

A)  the reduction in economic welfare of taxpayers that exceeds the revenue raised by the government. 
B)  the improved efficiency created as people reallocate resources according to the tax incentive rather than the true costs and benefits. 
C)  the loss in tax revenues. 
D)  Both a and b are correct. 
A)  the reduction in economic welfare of taxpayers that exceeds the revenue raised by the government. 
B)  the improved efficiency created as people reallocate resources according to the tax incentive rather than the true costs and benefits. 
C)  the loss in tax revenues. 
D)  Both a and b are correct.

Question 20

Table 12-17
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.
  
-Refer to Table 12-17.Which of the three tax systems is proportional?

Accepted Answer

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

Exam 12: The Design of the Tax System.

Table 12-8 -Refer to Table 12-8.If the government imposes a $3,000 lump-sum tax,the marginal tax rate for Charles would be

Which of the following is true about the percent of total income all levels of government in the U.S.take as taxes?

In 2009,which category represented the largest category of spending for the U.S.federal government?

Tax evasion is

Which of the following in not a reason that a lump-sum tax imposes a minimal administrative burden on taxpayers?

If James earns $80,000 in taxable income and pays $20,000 in taxes,his average tax rate is 25 percent.

The tax that generates the most revenue for state and local government is the

Taxes create deadweight loss when they

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 marginal tax rate when income is $60,000?

An efficient tax system is one that (i)maximizes tax revenues. (ii)minimizes deadweight losses from taxes. (iii)minimizes administrative burdens from taxes. (iv)promotes equity across taxpayers.

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 average tax rate in 2009?

State and local governments generate revenue from all of the following sources except

Which of the following programs is not included in the federal income security spending?

The public welfare spending category for state and local governments includes

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000.What are the tax liability and the marginal tax rate for a person whose income is $30,000?

If Christopher earns $80,000 in taxable income and pays $20,000 in taxes,his average tax rate is 20 percent.

An efficient tax system is one that imposes small deadweight losses and small administrative burdens.

In practice,the U.S.income tax system is filled with special provisions that alter a family's tax based on its specific circumstances.

The deadweight loss of a tax is

Table 12-17 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-17.Which of the three tax systems is proportional?

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.

Filters